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Fitch: Liquidity in the Islamic bond market is improving, but remains below pre-war levels in Iran.June 10th - Seema Shah, Chief Global Strategist at Principal Asset Management, stated that while US inflation remains uncomfortably high at 4%, weaker-than-expected core data did alleviate some pressure. With rising energy prices being the primary driver and housing costs easing, we havent yet seen clear signs of a broader second-round effect. This should allow the Federal Reserve to remain patient. Although the market seems to have overpriced further rate hikes this year, that risk remains, and todays data did not eliminate it.June 10 – As expected, the Bank of Canada kept its benchmark interest rate unchanged at 2.25% today. In its statement, the Bank of Canada noted that economic activity remained weak after a surprise 0.1% annualized decline in GDP in the first quarter (the third contraction in the past four quarters). The Bank of Canada avoided using the term "recession." The bank expects GDP to return to growth in the second quarter, "but even with some rebound, the economy is expected to remain in a state of overcapacity." Economists said that overcapacity (or economic slack) should help curb inflationary pressures.June 10 – The Bank of Canada kept its main interest rate unchanged on Wednesday, in line with market expectations, and stated that there is currently no sufficient evidence that rising energy prices are driving broad-based inflation. Bank of Canada Governor Macklem reiterated that the bank would not hesitate to raise interest rates to control inflation if necessary. Wednesdays decision marks the fifth consecutive time the Bank of Canada has kept its main policy rate at 2.25%, as several factors have complicated the economic outlook. The war in Iran has caused gasoline prices to soar, putting pressure on household budgets, although Canada, as a net exporter of crude oil, has benefited from increased revenue. The central bank stated, "To date, there is no sufficient evidence that high energy prices have been widely passed on to other consumer prices. The Governing Council will continue to ignore the short-term effects of the war on overall inflation, but will not allow rising energy prices to develop into persistent inflation."US Senate Majority Leader Thune: Trumps nomination for Director of Intelligence will be a major decision.

USD/CHF Consolidates Around 0.9040 As Attention Shifts To US Inflation

Daniel Rogers

Apr 10, 2023 14:27

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The USD/CHF pair continues to trade lacklusterly above the crucial support level of 0.9036 in the early Tokyo session. Investors are shifting their focus to Wednesday's release of United States Consumer Price Index (CPI) data, making it difficult for the Swiss Franc to gain traction.

 

As tensions between China and Taiwan escalate, S&P500 futures have pared some of their gains. The market's anxiety has been alleviated by the increasing intensity of Chinese military exercises around Taiwan Island. In addition, concerns of a recession are likely to cause volatility in US equities.

 

Jamie Dimon, CEO of JPMorgan Chase, stated in an interview with CNN that the recent banking turmoil caused by the dissolution of Silicon Valley Bank (SVB) and Signature Bank has increased the likelihood of a recession in the United States.  Despite the robustness and security of the banking system, the recent turmoil in the financial system is "another weight on the scale" toward recession, he added.

 

The US Dollar Index (DXY) is protecting the 102.00 support level ahead of US Consumer Price Index (CPI) data. According to the consensus, headline inflation will fall from 6.0% to 5.2%. In addition, the headline monthly CPI would decelerate to 0.3% from 0.4% previously reported. As a consequence of oil prices remaining low in March, inflationary pressures are anticipated to become evident.

 

In contrast, the core CPI, which excludes crude and food prices, is anticipated to increase to 5.6% from 5.5%. The tenacity of inflationary pressures is maintained by the resiliency of demand for essential products, as a result of a higher labor cost index. A similar event could compel the Federal Reserve (Fed) to raise rates again at its May monetary policy meeting.

 

Regarding the Swiss Franc, Swiss markets are suspended on Easter Monday. This week, the Producer Price Index (PPI) data will have an impact on the Swiss Franc.

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