- Trump/Xi Jinping meeting rather tame, so far
- BoC reiterates that it is data dependent.
- The US dollar opens with a modest bid after a quiet overnight session
USDCAD open: 1.3707, overnight range 1.3702-1.3721, close 1.3708, WTI 101.07, Gold 4,698.79.
The Canadian dollar is creeping lower in an otherwise subdued session, driven by modest but broad-based demand for the US dollar as markets reprice the Fed toward a more hawkish stance. Back-to-back US CPI and PPI reports both came in hotter than expected.
The Bank of Canada's summary of deliberations landed without fanfare, adding nothing new to the debate over where Canadian rates are headed. Policymakers remain firmly in wait-and-see territory.
WTI crude held a 99.65-102.33 range as traders kept one eye on the Trump/Xi Jinping talks in Beijing. On the supply side, a Chinese supertanker carrying two million barrels of Iraqi crude cleared the Strait of Hormuz without incident, as did a Japanese tanker making the same passage.
Kevin Warsh is officially the new Chair of the Federal Reserve. His selection by Trump has led many to conclude he shares the president's preference for lower interest rates. But don’t bet on it. He was a hawk when he was a Fed governor from 2006-2011.
Global markets are navigating a crowded field of risk events: political instability in the UK, Trump's Beijing sit-down with Xi Jinping, an unresolved energy crisis, and no visible exit ramp from the Iran war. Layered on top of all that is a slate of US economic releases, headlined by Retail Sales and Business Inventories.
Asian equities closed mixed. Australia's ASX 200 edged up 0.12%, Japan's Topix slipped 1.03%, and Hong Kong's Hang Seng finished little changed.
As of 7:15 am, the German DAX is up 1.31%, the French CAC 40 has gained 0.74%, and the UK FTSE 100 is up 0.40%. S&P 500 futures are ahead 0.33%, the 10-year Treasury yield is 4.48%, and the DXY is at 98.53.
EURUSD traded in a 1.1705-1.1721 range. Traders were largely on the sidelines ahead of updates from the Trump/Xi summit. Lingering anxiety over oil supply disruptions and the prospect of the Fed holding rates higher for longer kept a lid on gains for the single currency.
GBPUSD bounced around in a 1.3504-1.3533 range, unable to find direction despite a broadly constructive set of UK data releases. Q1 GDP came in at 1.1% against a 0.8% forecast, and Manufacturing Production surged to 1.2% in March from -0.2% the prior month. The numbers failed to generate any meaningful lift, likely because the market has already discounted them as pre-Iran war readings.
USDJPY drifted in a 157.56-157.99 band with little conviction on either side. The one notable input came from Bank of Japan board member Kazuyuki Masu, who indicated a rate increase remains appropriate absent a meaningful deterioration in economic conditions.
AUDUSD chopped between 0.7241 and 0.7265, carrying a mild bid tone through the session but struggling to build on it. The latest US inflation data is consistent with the FOMC keeping rates on hold.
