- Canada March Retail Sales expected to rebound
- European equities and Wall Street futures firm post-FOMC minutes
- US dollar opens lower compared to Wednesday.
USDCAD Snapshot: open 1.2816-20, overnight range 1.2804-1.2847 close 1.2818, WTI open $111.31, Gold open $1,845.92
The Canadian dollar traded sideways overnight but is inching higher in early NY trading today. The Canadian dollar gains are due to broad-based US dollar weakness as analysts reassess the global interest rate environment.
The FOMC minutes offered no surprises. They confirmed that a 0.50% rate hike will occur in June and July but not what would happen afterwards. However, Fed Chair Jerome Powell and many colleagues have offered opinions on the longer term view, following the May 4 meeting.
Collectively, they are content to assess the data. Last week, Mr Powell said, “Restoring price stability is an unconditional need. It is something we have to do.” He is hoping to achieve the mythical soft landing, which is taming inflation by hiking rates while not slowing economic growth.
Fed Vice Chair Lael Brainard concurred with Mr Powell, saying that the Fed is taking strong action to reduce inflation.
Earlier this week, Cleveland Fed President Raphael Bostic injected a dovish note to the rate hike debate. He suggested that the Fed could pause rate hikes in September to give policymakers time to assess how the previous hikes were working.
EURUSD traded higher following the release of the FOMC minutes and is sitting at the top of its overnight 1.0664-1.0722 range in NY. Prices are supported by the view that the market has priced in the next round of US rate hikes while the ECB’s rate hike plans are not reflected in the single currency.
GBPUSD climbed from 1.2553 to 1.2618, following in the footsteps of EURUSD while being underpinned by general US dollar weakness.
USDJPY is trading with a negative bias in a 126.56-127.57 range, weighed down by the slide in US Treasury yields.
AUDUSD traded in a 0.7059-0.7108 range, while NZDUSD traded in a 0.6449-0.6499 band. The currencies moved in tandem, and both are near session lows in NY trading.
Canadian dollar traders will likely ignore the release of the March Retail Sales report today. Retail Sales are expected at 1.4% m/m a vast improvement over February’s dismal 0.1% gain. Retail Sales ex-auto’s are forecast at 2.0% compared to 2.1% in February.
However, US data may cause a flurry if it impacts S&P 500 prices. US weekly jobless claims are expected to dip to 215,000 from 218,000 last week. Q1 GDP is expected to be unchanged at 0.8%, and Pending Home Sales to have dropped 2.0% compared to the 1.2% decline in March.
