- Market attention shifts from Iran to China.
- Oil prices inch higher
- The US dollar opens mixed to firmer in early NY trading
USDCAD open: 1.3702, overnight range 1.3684-1.3711, close 1.3699, WTI 101.34, Gold 4,700.15.
The Canadian dollar drifted inside a familiar band as overnight activity lacked conviction. Tuesday's US inflation prints reinforced expectations for a more restrictive Federal Reserve policy path.
Kevin Warsh has been confirmed as a Fed governor and his confirmation as Chairman is anticipated later today.
Canada's energy sector is catching a tailwind. The Globe and Mail reports that Prime Minister Carney and Alberta are nearing an agreement that substantially softens the Trudeau-era carbon pricing framework, with the levy now set at $140 per tonne by 2040 rather than the previous target of $170 per tonne by 2030.
WTI crude traded in a 100.57-102.39 band and is supported by the continued blockade of the Strait of Hormuz. The International Energy Agency has revised its oil supply outlook sharply lower, projecting a severe global deficit through the end of the third quarter of 2026.
Attention now turns to the US Producer Prices report due later today. A reading that points to broadening inflationary pressure would reinforce the hawkish Federal Reserve narrative and lend further support to the dollar.
Asian equity markets ended the session mixed. Japan's Topix added 0.30%, Hong Kong's Hang Seng was little changed, and Australia's ASX 200 slipped 0.49%.
Global market attention has shifted from Iran to Trumps trip to China. The president is hoping to get China to ease support for Russia and help open the Strait of Hormuz.
April CPI is expected to have dipped to 0.6% m/m from 0.9%, while headline CPI rises to 3.7% y/y from 3.3% in March. Core CPI (ex food and energy) is forecast at 2.7%, compared to 2.6% in March.
Asian equity markets drew fresh momentum from an artificial intelligence surge emanating from South Korea, closing broadly higher. The exception was Australia's ASX 200, which slipped 0.46%, while Japan's Topix advanced 1.20% and Hong Kong's Hang Seng edged up 0.15%.
As of 7:30 am Germany's DAX has gained 0.72%, the French CAC 40 is off 0.46%, and the UK FTSE 100 is little changed. S&P 500 futures have risen by 0.21%, the 10-year Treasury yield sits at 4.459%, and the DXY is 98.47.
EURUSD see-sawed in a 1.1696-1.1742 range. Sentiment soured after ECB Governing Council member and Bank of Finland Governor Olli Rehn cautioned that economic data is beginning to signal stagflation risks, while ECB policymaker Francois Villeroy indicated he requires further data before committing to a rate adjustment. Eurozone GDP and employment figures were both flat in the first quarter.
GBPUSD held within a 1.3495 to 1.3552 band and is under pressure from domestic political uncertainty, with calls for Prime Minister Keir Starmer's resignation intensifying and some market participants drawing uncomfortable comparisons to the Liz Truss episode.
USDJPY crept upward across a 157.57 to 157.90 corridor in an otherwise subdued session, supported by firmer crude oil prices. On the data front, Japan's March current account surplus came in at 4.7 trillion yen, lifted by strong exports of semiconductors and electronic components as well as solid direct investment income.
AUDUSD was contained within a narrow 0.7231 to 0.7248 range as competing forces kept the pair anchored. The Reserve Bank of Australia's rate increase last week provided a degree of insulation against a broadly firmer US dollar, itself buoyed by hawkish Federal Reserve expectations following stronger than forecast inflation data.
