– Canadian dollar lags improved global risk sentiment.
– Bank of Canada meeting on Wednesday.
– US dollar retreats overnight.
USDCAD snapshot: open 1.3499-03, overnight range 1.3484-1.3511, close 1.3510, WTI $80.09, Gold $2004.44
The stellar domestic Labour Force Survey has been forgotten while the prospect of one or two more Fed rate hikes puts downward pressure on the Loonie.
The Bank of Canada monetary policy meeting is tomorrow, and with it, the quarterly Monetary Policy Report is released. This meeting may underwhelm.
The BoC is universally expected to leave interest rates unchanged at 4.50% and repeat its forward guidance that rates will remain unchanged in order to give previous rate hikes time to work through the economy. Many economists believe that 4.5% is the BoC’s terminal rate.
The Canadian dollar is seeing a bit of support from West Texas Intermediate (WTI) oil prices, which remain in the $80.00/barrel area. WTI retreated from its overnight peak of $80.58/b after weaker than expected Chinese inflation data suggested that its economic rebound was more sluggish than expected.
World Bank President David Malpas delivered a slightly improved outlook for the global economy at the opening of the World Bank and International Monetary Fund (IMF) spring meetings. The World Bank upgraded its 2023 growth outlook to 2.0% from 1.7% at the previous meeting and said that the US and European economies would do better than previously forecast. Nevertheless, the upgraded growth outlook is still below the 3.0% predicted last July.Wall Street closed with small gains yesterday, and Asian markets followed suit. Australia’s ASX 200 index finished with a 1.20% gain, while Japan’s Nikkei 225 index rose 1.05%. Europeans returned from an extended long weekend, and stocks gapped higher at the open, led by a 0.70% jump in the French CAC 40 index. S&P 500 futures are flat.
EURUSD traded in a 1.0860-1.0926 range due to improved risk sentiment and mixed economic data. European Sentix Investor Confidence in was -8.7 in April (-11.1 in March) while March Retail Sales fell 3% compared to -1.8% in February.
GBPUSD rose from 1.2382 to 1.2455 supported by broad US dollar weakness and bullish technicals that target 1.2550.
USDJPY traded in a 132.99-133.68 range, supported by the bounce in the US 10-year yield from yesterday’s low of 3.35% to 3.415% today.
AUDUSD rallied from 0.6640 to 0.6678 after Westpac Consumer Confidence jumped to 9.4% in April compared to 0% in March.
There isn’t much in the way of top tier data from the US or Canada today.