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March 19th - Amid escalating tensions in Iran, the Bank of Japan maintained its benchmark interest rate. The yen rose 0.1% against the dollar to 159.64. The Iranian conflict has pushed up oil prices, exacerbating inflationary pressures in Japan, which is heavily reliant on Middle Eastern oil. The yen weakened overnight after Federal Reserve Chairman Jerome Powell stated that there would be no further rate cuts until inflation begins to decline. Sources familiar with the matter indicated that the Bank of Japan is still likely to raise rates, with the possibility of an April hike not ruled out. Market focus will shift to the press conference held by Governor Kazuo Ueda at 2:30 PM today for any clues regarding the timing of a rate hike. The recent depreciation of the yen has prompted warnings from Japanese officials. The Finance Minister stated that the authorities are fully prepared to act if necessary. However, strategists believe the threshold for intervention is high, as rising oil prices and robust US data fundamentally pushing the dollar higher may make it more difficult for authorities to find a reason to intervene.Bank of Japan: Japans economy is recovering moderately, but some sectors remain weak.Bank of Japan: We must pay attention to market trends and rising oil prices.Bank of Japan: Risks to Japans economic outlook include the situation in the Middle East, oil price volatility, and market developments, including foreign exchange rates.Bank of Japan: We must be wary of the potential impact of rising oil prices on underlying inflation.

USD/CAD Bears In Control And Aiming At Support Zone Lows

Alina Haynes

Apr 04, 2023 13:53

USD:CAD.png 

 

The USD/CAD exchange rate is unchanged on the day after a succession of negative impulses drove the price into new territory to the downside and deeper into a support region as a result of the oil price rally. The USD/CAD exchange rate was 1.3431 at the time of writing.

 

Monday's 6.3% rise in West Texas Intermediate WTI crude oil to an intraday high of $81.51 strengthened the CAD. The oil price surged after the OPEC+ cartel surprised the market with a production cut of 1.1 million barrels per day to support prices, with the cartel announcing that it will reduce output prior to Monday's ministerial meeting.

 

Analysts at TD Securities observed that the Bank of Canada's Business/Consumer Surveys painted a more dovish picture ahead of the April BoC meeting, with a marked improvement in capacity pressures and consumer inflation expectations.

 

Analysts noted that firm-level inflation expectations continue to be elevated and that consumer growth and income expectations have also increased since the fourth quarter.

 

''The Bank of Canada should be pleased with these results, which indicate a decline in capacity pressures and a moderation in inflationary pressures. However, inflation expectations remain a formidable impediment to near-term relief. If growth does not decelerate substantially in the second quarter, it may be difficult for the Bank of Canada to keep rates at 4.50 percent. Analysts believe that the report is optimistic for CAD.


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