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On August 5th, Kansas City Federal Reserve President Schmid stated, "The Fed needs a tighter monetary policy to restore inflation to its 2% target. The Feds current policy stance is not restrictive. Inflation is currently too high, which is worrying, and the Fed should not ignore it, even if it is caused by a supply shock. The recent easing of energy prices may be temporary. Investment in artificial intelligence is pushing up inflation, and the Fed should not ignore this."Federal Reserves Schmid: Im uneasy about the assumption that the inflation outbreak will be temporary. Our inflation problem isnt just about energy.Futures News, August 5th - According to foreign media reports, Malaysian palm oil futures on the Bursa Malaysia Derivatives Exchange (BMD) are likely to open lower on Wednesday morning, following the decline in external markets. Statements from Qatari and US officials boosted hopes for a diplomatic solution to the oil shipping issue in the Strait of Hormuz, causing oil prices to fall on Tuesday, closing at a three-week low. During Wednesdays electronic trading session, Brent crude futures fell further, coupled with a decline in Chicago soybean oil futures, which will drag down the early performance of Malaysian crude palm oil futures. An expected increase in Malaysian palm oil inventories is also unfavorable for prices. The Malaysian Palm Oil Board (MPOB) will release monthly data on August 10th. A survey shows that Malaysian palm oil exports in July will surge 14.8% month-on-month, production will increase by 7.4%, and inventories will rise to a five-month high. However, strong palm oil exports in July and the potential threat of a strong El Niño phenomenon to palm oil production in Southeast Asia will provide potential support for the palm oil market. Shipping surveyors estimate that Malaysian palm oil exports in July increased by 12.1% to 19.5% month-on-month.Federal Reserves Schmid: The recent easing of energy prices may be temporary.Federal Reserves Schmid: The job market appears to be broadly balanced.

As Investors Anticipate a 25 Basis Point Fed Rate Hike, USD/CAD Corrects To Near 1.3700

Daniel Rogers

Mar 22, 2023 15:17

USD:CAD.png 

 

The USD/CAD pair is evidencing a corrective movement after failing to sustain a recovery above 1.3740 during the Asian session. Following a decline in Canada's inflation data, the Canadian dollar rebounded strongly from Monday's level of 1.3660. The falling Canadian Consumer Price Index (CPI) data confirmed that the Bank of Canada (BoC) could maintain its current policy stance.

 

Governor Tiff Macklem of the Bank of Canada maintains the status quo because he believes that the monetary policy is sufficiently restrictive to achieve price stability. However, BoC Macklem has left the door open for additional increases if the plan for reducing inflation fails.

 

Statistics Canada reported that the monthly inflation rate has increased by 0.4%, which is less than both the consensus estimate of 0.6% and the previous release of 0.5%. The headline CPI declined from 5.4% (consensus) and 5.8% to 5.2%. (previous release). The annual core CPI, which excludes the costs of fuel and food, decreased to 4.7% from 5.0%, but remained above the 4.4% forecast. The Bank of Canada, which has already increased interest rates to 4.5%, found the overall decline in inflation to be quite impressive.

 

In the interim, S&P500 futures are performing unfavorably after two days of intense buying. The odds favor the Federal Reserve increasing interest rates by 25 basis points (bps) for the second consecutive meeting. (Fed). As concerns of banking sector turmoil persist, the US Dollar Index (DXY) struggles to maintain its position above 103.20. In addition, analysts from UBS believe that tighter credit standards, economic contraction, and falling inflation could prompt the Fed to reduce interest rates this year.


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