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JPMorgan Chase raised its price target for Phillips 66 (PSX.N) from $188 to $202.Eurostat data released Thursday showed that eurozone inflation surged further in April, driven by soaring energy costs, adding to the justification for a European Central Bank (ECB) interest rate hike, although modest underlying price growth data reduced the urgency of any action. The eurozones preliminary April CPI jumped to 3.0% year-on-year from 2.6% in the previous month, further exceeding the ECBs 2% target, with energy costs accounting for the vast majority of the increase. Meanwhile, core inflation, excluding volatile food and energy prices, slowed. Services inflation—a persistently high component of the price basket in recent years—slowed to 3.0% from 3.2%, while non-energy industrial inflation, a major drag on prices, rose to 0.8%. These figures are mixed for the ECB, which will likely keep interest rates unchanged at its meeting tonight, although it will signal an increasing likelihood of policy tightening. While high overall inflation data provides a reason for a rate hike, underlying data suggests that the initial energy shock has not yet produced a significant second-round effect.Telsey Advisors raised its price target for Amazon (AMZN.O) to $315 from $300.On April 30, Geely Automobile (00175.HK) announced that it entered into a service agreement with Cao Cao Mobility, under which the Group conditionally agreed to purchase business travel and event services from Cao Cao Mobility Group. The proposed annual caps of the service agreement for the three years ended December 31, 2028 are approximately RMB 934 million, RMB 994 million and RMB 1.058 billion, respectively.On April 30th, Eurostat released preliminary figures showing that the Eurozones first-quarter GDP grew by 0.1% quarter-on-quarter, below economists expectations of 0.2% and also lower than the previous quarters 0.2% growth. This is the first snapshot of economic activity since the outbreak of the conflict in Iran, indicating weak economic growth in the first quarter. As an energy-importing region, the Eurozone is considered one of the most vulnerable developed economies to disruptions in oil, gas, and other cargo transport from the Strait of Hormuz (since the end of February). A series of surveys released this week suggest that economic activity will slow further: business confidence is weakening, the service sector is deteriorating, profits are declining, exports remain impacted by tariffs, and banking signals indicate tightening credit conditions. This sluggish economic backdrop complicates the European Central Banks response to emerging, energy-driven inflation.

USD/CAD declines to 1.3500 on firmer Oil prices, BoC concerns over US inflation, and Fed Minutes

Daniel Rogers

Apr 10, 2023 14:35

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The USD/CAD maintains losses close to 1.3500, shattering a four-day winning trend, as traders brace for key Easter Monday data/events on major bourses. However, the recent decline in the Loonie-U.S. dollar exchange rate may be due to the increase in the price of WTI petroleum oil, Canada's primary export. In contrast to the recent increase in ardent Fed forecasts, the Bank of Canada's (BoC) dovish bias poses a challenge to pair sellers.

 

After increasing for three consecutive weeks, WTI crude oil prices gain 0.61 percent intraday near $80.00. Recent increases in the price of black gold may be due to geopolitical concerns surrounding China and Taiwan. In addition to the supply cut by OPEC+ and the faltering US dollar, the energy benchmark is sustained by the supply cut by OPEC+ and the weakening US dollar.

 

However, the US Dollar Index (DXY) has fallen for three consecutive weeks and is under pressure near 102,000.

 

Fears of higher Fed rates versus inaction from the Bank of Canada (BoC) grew after the upbeat US Jobs report versus the lack of significant positives in the March Canadian jobs report.

 

As a result, the CME's FedWatch Tool indicates a 69% chance of a 0.25 basis point rate hike in May, up from 55% prior to the US employment report.

 

Canada's headline Net Change in Employment increased to 34.7K in March from 21.8K in February, compared to the market consensus of 12K, while the Unemployment Rate came in at 5% versus the analysts' estimate of 5.0%. During the specified month, the Participation Rate decreased to 65.6% from the expected and previous rate of 65.7%. In addition, the average hourly wage fell 5.2% year-over-year in March, down from 5.5% in February.

 

In contrast, the US Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls (NFP) increased by 236K in March, the lowest increase since January 2021 (considering revisions), compared to the expected 240K and the previous 330,000. Additionally, the unemployment rate fell from 3.6% to 3.5%, while the labor force participation rate rose from 62.6% to 62.6%. The annual wage inflation rate decreased from 4.6% to 4.2%, below market expectations of 4.3%.

 

Futures on US equities ended higher, but yields remain under pressure ahead of the crucial BoC monetary policy meeting, US inflation, and Fed Minutes. Given the dovish concerns from the Bank of Canada (BoC) and the likely hawkish comments in the FOMC Minutes, the USD/CAD may see additional gains, barring any unexpected developments.


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