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1. The three major U.S. stock indexes closed slightly higher. The Dow Jones Industrial Average rose 0.07% to 49,533.19 points, the S&P 500 rose 0.1% to 6,843.22 points, and the Nasdaq Composite rose 0.14% to 22,578.38 points. Apple rose more than 3% and Nike rose more than 2%, leading the Dow Jones. Citigroup rose 2.7% and JPMorgan Chase rose 1.7%. The Wind U.S. Tech Big Seven Index rose 0.53%, with Amazon and Nvidia rising more than 1%. The Nasdaq China Golden Dragon Index fell 0.1%, with LuKing Holdings rising nearly 16% and TAL Education Group falling more than 3%. Supported by gains in financial stocks, the major stock indexes regained their footing after last weeks decline. 2. European stock markets closed higher across the board. The German DAX index rose 0.8% to 24,998.4 points, the French CAC40 index rose 0.54% to 8,361.46 points, and the UK FTSE 100 index rose 0.79% to 10,556.17 points. 3. US Treasury yields were mixed. The 2-year Treasury yield rose 3.34 basis points to 3.435%, the 3-year Treasury yield rose 2.22 basis points to 3.467%, the 5-year Treasury yield rose 1.73 basis points to 3.621%, the 10-year Treasury yield rose 1.14 basis points to 4.060%, and the 30-year Treasury yield fell 0.58 basis points to 4.689%. 4. International precious metals futures generally closed lower. COMEX gold futures fell 2.33% to $4896.10 per ounce, and COMEX silver futures fell 3.93% to $73.55 per ounce. 5. The WTI crude oil futures contract closed down 2.24% at $62.3 per barrel; the Brent crude oil futures contract fell 1.85% to $67.38 per barrel. Progress was made in negotiations between the United States and Iran on the nuclear agreement, with both sides reaching an agreement on key principles. Market concerns about geopolitical risks eased, and expectations of tight oil supply weakened. 6. Most London base metals fell. LME zinc was flat at $3,290.0/ton, LME tin fell 0.21% to $45,585.0/ton, LME aluminum fell 0.54% to $3,036.0/ton, LME lead fell 0.74% to $1,943.5/ton, LME copper fell 1.46% to $12,663.5/ton, and LME nickel fell 1.67% to $16,830.0/ton.Reserve Bank of New Zealand: The labor market is stabilizing, but the unemployment rate remains high.Japanese Chief Cabinet Secretary Minoru Kihara: Japans investment projects in the United States will promote mutual benefit and economic growth for both countries, and ensure economic security.The Reserve Bank of New Zealand (RBNZ) expects the official cash rate to be 2.26% in June 2026 (previously 2.2%) and 2.52% in March 2027 (previously 2.34%).Japanese Chief Cabinet Secretary: Japans investment projects in the United States will promote mutual benefit and win-win results between the two countries, drive economic growth, and safeguard economic security.

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

 USD:CAD.png

 

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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