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FedEx (FDX.N) shares fell 5%, the biggest drop since early May.The German DAX 30 index closed up 359.11 points, or 1.46%, at 24,995.27 on Tuesday, June 30; the UK FTSE 100 index closed up 19.74 points, or 0.19%, at 10,503.96; and the French CAC 40 index closed up 36.66 points, or 0.44%, at 8,403.99. The Stoxx 50 index closed up 93.33 points, or 1.50%, at 6324.96 on Tuesday, June 30; the Spanish IBEX 35 index closed up 83.26 points, or 0.43%, at 19470.66 on Tuesday, June 30; and the Italian FTSE MIB index closed up 537.30 points, or 1.05%, at 51700.50 on Tuesday, June 30.June 30 – According to the Wall Street Journal, informed officials revealed that an internal power struggle in Iran is threatening the US-Iran peace talks: civilian leaders are seeking to unfreeze billions of dollars in assets, while hardline military officials are vying for control of the Strait of Hormuz. The civilian leadership, led by Iranian President Peshichizian, aims to unfreeze billions of dollars to alleviate the plight of millions of Iranians. However, other forces, including the now dominant Revolutionary Guard, have different plans. The Revolutionary Guard intends to maintain complete control of this crucial strait at all costs and plans to establish a lucrative toll system to both bolster the armed forces finances and dominate the security landscape of the entire region. The Revolutionary Guard has informed mediators that if they cannot obtain assurances in the Doha negotiations regarding Irans sole control of the Strait of Hormuz, they will close the waterway again. Furthermore, the organization has demanded that the United States and other countries abandon plans to allow ships to pass through the southern waters of the strait (closer to the Omani side).The U.S. Energy Information Administration (EIA) revised its March U.S. crude oil production estimate upward by 22,000 barrels per day to 13.718 million barrels per day. U.S. April crude oil production increased by 216,000 barrels per day from March, reaching 13.934 million barrels per day.The percentage of US Treasury bonds auctioned for the six weeks ending June 30 was 54.61%, compared to 92.35% 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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