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Google (GOOG.O): Google Finance will be launched in more than 100 countries in the coming weeks, with full local language support.EU High Representative for Foreign Affairs and Security Policy Karas: The ceasefire in Iran is reassuring, but uncertainty remains in the region.April 8th - Following a lukewarm reception from overseas investors at several U.S. Treasury auctions last month, this weeks 10-year and 30-year Treasury auctions will be closely watched for signs of weakening foreign demand. While Tuesdays three-year bond auction (the first of seven major U.S. government auctions in April) yielded positive results, easing concerns that the war was pushing up borrowing costs due to buyers leaving the market, doubts remain ahead of the 10-year Treasury auction at 1 p.m. ET (1 a.m. Thursday Beijing time). Data from three auctions conducted by the U.S. Treasury in the first half of March showed a decline in the share allocated to foreign accounts. Combined with Federal Reserve data showing a decrease in U.S. Treasury holdings held in custody for foreign official and international accounts since mid-February, this corroborates the view that the war has weakened overseas demand for U.S. Treasury bonds. John Briggs, head of U.S. interest rate strategy at Natixis, stated that the March auction data neither proves nor refutes this theory, as it is only a monthly auction result, but the decline in foreign custody holdings suggests that this may indeed be the case.Fed mouthpiece Nick Timiraos: Even if the conflict had never occurred, the likelihood of a federal funds rate cut is gradually decreasing. The labor market is performing better than expected, while PCE inflation is not declining as quickly as officials anticipated.The US 4-month Treasury auction ended April 8th with a winning yield of 3.6%, compared to 3.62% previously.

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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