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June 16th, Futures News: Following the end of the Iran war, crude oil prices have fallen sharply, lowering cost support for fuel oil. Market participants, driven by bearish sentiment, are mostly adopting a wait-and-see approach, with cautious trading focused on small, immediate needs. Market activity is subdued, and refineries are facing increased difficulties in shipping. It is expected that todays negotiations for slurry oil and wax oil will remain stable with a slight downward trend. While fuel oil prices are supported by low supply levels, the decline is relatively moderate, but sluggish trading at higher levels also carries the risk of further price reductions.On June 16th, Bank of Japan Deputy Governor Shinichi Uchida will replace the hospitalized Governor Kazuo Ueda, responsible for explaining the Bank of Japans latest decisions and future policy direction. Investors will closely watch Uchidas remarks to gauge his views on the future path of interest rate hikes and the Bank of Japans bond-buying policy. He faces a delicate task: to project a sufficiently hawkish stance to prevent a sharp depreciation of the yen, while simultaneously considering Prime Minister Sanae Takaichis inclination towards pro-economic monetary policies. Some economists believe that if Uchida deviates from Uedas position, it could shake the entire situation. Others say that Uchidas style is more direct, differing from Uedas subtle and unbiased communication style. According to the chief economist at Daiwa Institute of Economics, Uchida is likely to draw on his experience in policy implementation to provide a very thoughtful explanation to help market participants better understand the Bank of Japans thinking, particularly regarding the normalization process.A fire broke out at an oil depot in Russias Krasnodar region due to a drone attack.Easing tensions in the Middle East have put pressure on international oil prices. A quick chart shows the pre-market conversion of domestic and international crude oil prices.June 16th - In SpaceXs $86.2 billion IPO, every customer of some of the largest retail brokerage firms in the US received at least one share, highlighting the initial design of the offering to allow retail investors to play a significant role. According to representatives of the companies, all eligible customers received a portion of the stock allocation after submitting stock subscription requests to platforms such as Robinhood, Charles Schwab, and Fidelity. It was reported that SpaceX ultimately allocated approximately 20% of its initial public offering proceeds to global retail investors. Sources indicated that due to demand exceeding $100 billion, many investors hoping for higher allocations were unsuccessful. On its second day of trading, SpaceXs stock price had already surged over 40%, reaching a market capitalization of $2.5 trillion.

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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