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The China Earthquake Networks Center automatically determined that an earthquake of approximately magnitude 3.8 occurred near Liunan District, Liuzhou City, Guangxi Province at 08:13 on May 20. The final result is subject to the official rapid report.The President of the Council of the European Union: The Council of the European Union and the European Parliament have just reached a provisional agreement on the implementation of two regulations on EU tariff reductions as outlined in the EU-US Joint Declaration.Futures News, May 20th: Domestic supply remains at a low level, and inventories at major ports are expected to continue to decline. However, downstream orders are weak, demand is insufficient, and there are many unstable factors in the Middle East. Oil prices have weakened from their high levels, and the diethylene glycol market may continue to be under pressure in the short term, with downstream buyers remaining cautious.On May 20th, according to foreign media reports, most soybean meal futures contracts on the Chicago Board of Trade (CBOT) fell on Tuesday, with the benchmark contract closing down 0.7%, mainly pressured by profit-taking by long positions. The most actively traded July contract traded between $330.7 and $338.2. Last week, soybean meal futures surged, reaching their highest level since October 2024, and the technical pattern is now severely overbought, indicating a potential correction. EU data shows that as of May 17th, EU soybean imports for the 2025/26 marketing year totaled 11.6 million tons, down 8% year-on-year; soybean meal imports totaled 15.7 million tons, down 7% year-on-year.The European-Mediterranean Seismological Centre reports a magnitude 5 earthquake in southern Iran.

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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