- Iran and US peace talks in Islamabad today
- Fed Chair nominee Kevin Warsh confirmation hearing today.
- The US dollar grind out gains
USDCAD open: 1.3662 overnight range 1.3638-1.3664, close 1.3646, WTI 86.79, Gold 4784.88.
The Canadian dollar edged lower in an uneventful overnight session as attention remained fixed on Islamabad peace talks and Kevin Warsh’s Fed Chair nomination hearing today. Traders are assuming the US-Iran conflict will wind down in some form over the next few days and are shifting focus toward the FOMC interest rate outlook.
WTI traded in an 85.67-87.49 band. Near-term technicals remain bearish below 90.00/b, with prices vulnerable to a retest of support near 80.00.
FX markets have a steady tone as Jerome Powell’s May 15 departure approaches, although he has indicated he will remain in the role until a successor is confirmed. Thom Tillis has threatened to block Warsh’s nomination until the Justice Department probe into Powell and the Fed is resolved.
The US dollar edged modestly higher ahead of ceasefire talks in Islamabad, which still include Iranian negotiators for now.
Kevin Warsh faces his Fed Chair confirmation hearing today at 10:00 am. Senator Thom Tillis has threatened to block the process until the Justice Department probe into Powell and the Fed is resolved.
Asian equities closed with Japan’s Topix falling 0.18%, Hong Kong’s Hang Seng rising 0.48%, and Australia’s ASX 200 unchanged.
As of 7:00 am, the German DAX has risen by 0.66%, the French CAC 40 is up 0.24%, and the UK FTSE 100 is higher by 0.16%. S&P 500 futures are up 0.40%, the 10-year Treasury yield is 4.255%, and the DXY is 98.26
EURUSD drifted lower in a 1.1757-1.1791 range. German and euro zone ZEW surveys disappointed. ZEW President Achim Wambach said, “Economic expectations are slipping into negative territory. The economic consequences of the Iran war for the German economy go far beyond price increases: Businesses are concerned about long-term shortages of energy supply, and this discourages investment and weakens the effect of government stimuli.”
ECB President Christine Lagarde warned that the range of possible outcomes for the euro area economy is wider than it was during the Russia-Ukraine war.
GBPUSD traded defensively in a 1.3483-1.3540 range as traders faded news that the unemployment rate fell to 4.9% from 5.2%. Analysts dismissed the data, suggesting that the drop was due to reduced economic activity. GBPUSD is also being pressured by ongoing political drama and concerns that PM Starmer could get replaced.
USDJPY firmed in a 158.74-159.26 range, underpinned by broad US dollar demand, firm US Treasury yields, and greatly reduced odds for a BoJ rate hike this month. Japanese lawmakers voted to remove restrictions on exports of defensive weapons. Let the arms race begin.
AUDUSD trickled lower in a 0.7144-0.7183 range on the back of AUDNZD selling pressure after higher-than-expected New Zealand inflation numbers fueled RBNZ rate hike concerns.
US headline retail sales and retail sales ex autos are expected to have risen 1.4% y/y in March.
