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A senior Iranian official said the United States cannot reopen the Strait of Hormuz with "unrealistic plans".On May 7th, the Ministry of Ecology and Environment held a symposium in Beijing on a diversified investment mechanism for scientific and technological innovation in the field of ecological environment. The meeting emphasized that establishing a diversified investment mechanism for scientific and technological innovation in the field of ecological environment is crucial for long-term development and overall stability. It stressed the need to fully leverage the governments guiding role, attracting social capital participation through major projects to create a diversified investment pattern. It also emphasized the importance of focusing on full-chain, full-cycle R&D investment, building a comprehensive funding support system around basic research, technology development, and industrialization demonstration. Furthermore, it called for deepening the synergy between fiscal and financial institutions, innovating financial services such as investment, loans, guarantees, bonds, and leasing to provide diversified financing support. The meeting stressed the need to strengthen the leading role of enterprises in scientific and technological innovation, increasing support for enterprises participating in major national science and technology projects, and promoting collaborative innovation among industry, academia, and research institutions. Finally, it emphasized the need to strengthen financial risk prevention, establishing a full-process performance tracking mechanism to ensure the safe and efficient use of funds.On May 7th, a think tank comprised of current and former central bank policymakers stated that if the Federal Reserve hopes to withstand ongoing political attacks and maintain its independence, it needs to improve its monetary policy implementation and communication with investors and the public. This report, led by former New York Fed President Dudley, from the Group of Thirty (G-30), discussed some of the reform recommendations put forward by Warsh, a nominee for Fed Chair and also a G-30 member, and made eight recommendations, including: publishing a clear roadmap outlining when and how the Fed will use its balance sheet, the associated costs and benefits, and the risks and potential benefits of balance sheet reduction. Recommendations also include publishing more detailed staff forecasts and limiting forward guidance to periods when interest rates are near zero. The group also urged the Fed to more clearly define the responsibilities between the central bank and the U.S. Treasury, particularly regarding balance sheet policy and financial stability tools. The report also recommended external review of the Feds policy framework and operations. The report also refuted Warshs suggestion to limit Fed policymakers communication through speeches and other channels. The group clearly stated that the Fed Chair has no right to make this change unilaterally, and that current external communication is an important tool for transparency.SpaceX is preparing for large-scale spending ahead of its IPO.On May 7th, according to reports from RIA Novosti and other media outlets, Russian Presidential Aide Ushakov told reporters that preparations for Russian President Vladimir Putins visit to China are progressing actively. RIA Novosti reported that when asked about the timing of Putins visit, Ushakov told reporters, "We are actively working on this visit and are making serious preparations." He added that the Russian side is maintaining regular communication with its Chinese partners.

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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