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Dell (DELL.N) shares rose to 10%.On September 11th, the preliminary reading of the University of Michigan Consumer Sentiment Index for September came in at 47.8, marking the second consecutive monthly decline, though the drop was less than 4 points. Both Democrats and Republicans saw significant declines, while independents remained largely unchanged from August. Expectations for personal finances and business conditions over the next year fell sharply. With rebounding fuel prices and escalating trade tensions, consumers anticipate greater pressure on their wallets in the future. Five-year expectations for business conditions remained stable, but the reading was well below historical averages, suggesting that consumers believe the new risks emerging this month may not further worsen the long-term outlook. Overall, consumer confidence is currently 16% lower than before the start of the Iran conflict in February and 13% lower than a year ago. Inflation expectations for the next year jumped to 4.6% this month from 4.0% last month, the highest reading since June. The current reading significantly exceeds the 3.4% in February before the Iran conflict and also surpasses all readings for 2024. Long-term inflation expectations rose slightly to 3.4%, ending three consecutive months at 3.3%. These expectations remain above the 2.8% to 3.2% range for 2024.The preliminary reading for the U.S. five- to ten-year inflation rate in September was 3.4%, compared to a forecast of 3.3% and a previous reading of 3.30%.The preliminary reading for the US one-year inflation rate in September was 4.6%, down from the expected 4.2% and the previous reading of 4.00%.The preliminary reading of the University of Michigan Consumer Sentiment Index for September was 47.8, below the expected 51 and the previous reading of 51.7.

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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