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July 17th - According to the Ministry of Finance, the battery consumption tax policy will be adjusted in stages starting September 1, 2026. According to a recent announcement by the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration, consumption tax preferences for lithium primary batteries, lithium-ion batteries, and photovoltaic cells will be gradually phased out; meanwhile, some new technology battery products will enjoy consumption tax exemption for a certain period. Industry insiders say that overall, this policy adjustment is in line with the changing development of my countrys battery industry, will better leverage the regulatory role of consumption tax, promote resource conservation and environmental protection, and will promote the healthy and high-quality development of the battery industry, driving technological progress and industrial upgrading.On July 17th, Francesco Pesole of ING Group stated in a report that investors expectations for a Bank of England interest rate hike appear overly aggressive. The market has already priced in a total of 36 basis points of rate hikes by the Bank of England in 2026. However, ING expects the Bank of England to maintain its interest rate at 3.75% throughout 2026. Pesole stated, "We still believe there are significant downside risks to short-term sterling interest rates."The VIX fear index hit a more than one-week high, ultimately rising 1.7 points to 18.44.The onshore yuan closed at 6.7773 against the US dollar at 16:30 on July 17, down 95 points from the previous trading day.Hong Kongs three-month unemployment rate in June was 3.7%, compared to an expected 3.70% and the previous reading of 3.70%.

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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