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On April 23, TSMC showcased its latest generation of chip manufacturing technologies, stating that it expects to produce smaller, faster chips without relying on ASMLs expensive new machines. TSMC, which manufactures chips for numerous companies including Nvidia, Apple, and Google, demonstrated two improvements to its chip manufacturing technologies: one called A13, slated for production in 2029 and potentially used in AI chips; and the other called N2U, a more economical option for manufacturing chips for mobile phones, laptops, and AI devices. For all the technologies TSMC showcased on Wednesday, the company plans to leverage the potential of its existing extreme ultraviolet (EUV) lithography machines from its Dutch supplier ASML, rather than moving to the next-generation high numerical aperture (High-NA) EUV machines, which cost up to $400 million each—approximately twice the cost of the older machines. Kevin Zhang, TSMCs Chief Operating Officer and Senior Vice President, stated, "I think this is where our R&D department has done a really good job of utilizing existing EUV technology while setting an aggressive technology miniaturization roadmap. Thats definitely an advantage."In an interview with US media on the 22nd, Ukrainian President Volodymyr Zelenskyy stated that he is open to a ceasefire between Russia and Ukraine, but he sees no possibility of progress in peace negotiations until the conflict with Iran ends and the US and Israel reach a final ceasefire with Iran. According to Ukraines Interfax news agency, Zelenskyy understood the US focus on Iran, but emphasized that Ukraine is equally important and cannot be ignored. He stressed that the conflict in Ukraine cannot be "resolved later," and a way to resolve both crises simultaneously must be found.The Teams connectivity issue for Microsoft (MSFT.O) 365 has been resolved.According to Fox News: US President Trump expects Iranian Foreign Minister Araqchi to continue participating in negotiations with Iran.Hang Seng Index futures closed up 0.03% at 26,169 points in overnight trading, a premium of 6 points.

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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