- Stocks rally as war rages and Russia talks nukes
- US Durable Goods Orders, Consumer Confidence data ahead
- US dollar retreats
USDCAD Snapshot: open 1.2736-40, overnight range 1.2686-1.2746, previous close 1.2736, WTI open $97.84, Gold open $1,904.69
The Canadian dollar consolidated yesterday’s losses overnight after a modest improvement in global risk sentiment Yesterday’s rebound on Wall Street and the slide in the US 10-year from 2.869% in Asia to 2.784% in NY, seems to have rejuvenated stock market bulls, while undermining the US dollar.
European stock markets are posting gain. The German Dax and French CAC indexes have gained 1.09% and 1.16% respectively, despite S&P futures retreating from their overnight peak, suggesting a negative open on Wall Street. Gold and oil prices are slightly firmer in subdued trading.
Canadian dollar traders ignored Bank of Canada Governor Tiff Macklem’s testimony to the House of Commons Finance Committee because he just repeated his opening statement from last week’s MPR press conference. Mr Macklem said that “achieving a soft landing is not going to be easy,” while warning that another 0.50% rate hike is likely June 1.
Mr Macklem believes that the bulk of the inflation issue is related to supply change issues and once they are fixed, prices will fall. However, he must be assuming that the Russian invasion of Ukraine and numerous sanctions won’t create new supply chain issues.
EURUSD climbed to 1.0738 in Asia, then dropped to 1.0674 just before NY opened as concerns about a Eurozone recession and the prospect of sharply higher US interest rates weighed on the currency. ECB policymaker and Latvian Central Bank Governor Martins Kazaks said, “A rate rise in July is possible and reasonable. Markets are pricing two or three 25 basis point steps by the end of the year. I have no reason to object to this, it’s quite a reasonable view to take.” The comments were not new and ignored.
GBPUSD traded in a 1.2704-1.2771 range, with prices following EURUSD lower. GBPUSD continues to suffer from growth concerns after a series of weak economic data, which may limit the BoE’s ability to raise rates.
USDJPY traded choppily in a 127.36-128.22 range. Japan’s’ unemployment rate dipped to 2.7% from 2.8% but was not a factor. Japanese officials continue to make noises about “rapid FX moves.” The government is planning a US$48 billion support package to ease pain from high energy prices.
AUDUSD bounced in a 0.7171-0.7228 range while NZDUSD traded in a 0.6611-0.6644 band. Both currency pairs were supported by modest US dollar weakness but are below their best levels.
US data includes Durable Goods Orders (forecast 1.0% vs Feb -2.1%), Case-Shiller Home Price Index, and Consumer Confidence.
