The USD rallied at the start of a week packed with catalysts, from economic data to new debt supply, as the yield on the U.S. 10-year note hit 2.99% for the first time since 2014 before pairing the increase. The pound joined major currencies retreating against the USD as U.K. Prime Minister Theresa May battled to avert a cabinet revolt over Brexit. U.S. Treasury Secretary Steven Mnuchin said he's considering a trip to China, adding he is "cautiously optimistic" a deal can be reached that would bridge differences over trade. China's Ministry of Commerce said yesterday that it would welcome such a move. The apparent softening of positions comes as Chinese tech shares remain under pressure in the wake of U.S. sanctions against ZTE Corp announced last week. Elsewhere in trade, senior officials from the three NAFTA signatory countries are set to meet again in Washington as a push to reach an agreement in coming weeks intensifies.
Yesterday, USDCAD initially fell from 1.2645 down to 1.2583 before climbing to 1.2676 on the back of broad-based USD strength. The pairing moved up to 1.2688 overnight before falling to 1.2632 ahead of the Canadian retail sales and inflation data. Although inflation edged higher on both a monthly and an annual basis, the numbers were a touch softer than expected. Retail sales disappointed coming in flat after stripping out auto sales. USDCAD surged to 1.2700 on the release and has since climbed to 1.2746 – the highest since April 9th with pull-backs limited to 1.2717. Overall, the USD is the best performing currency for the 2nd straight day as treasury yields are back above 2.90% and the DXY is back above 90. It appears to be more about USD strength today as the CAD is relatively unchanged vs the other major currencies despite the softer economic data.
U.S. stocks fell for the first time in four days as trade tensions resurfaced amid mixed earnings reports. Treasuries slipped and the dollar gained. The S&P 500 Index dropped as Chinese regulators ratcheted up their scrutiny of a Qualcomm Inc. acquisition, increasing trade concerns and helping to pull down chipmakers. Treasury yields reached 2.90 percent, the highest in eight weeks, while the greenback rose for a third day.
Yesterday, USDCAD initially held a 1.2550 – 1.2580 range before falling to 1.2525 in North American trade – a new 2 month low. The pairing eased back up to hold near 1.2555 for the balance of the session. There was a correction up towards 1.2600 overnight before a pull-back towards 1.2545 ahead of the Bank of Canada interest rate announcement. The BOC left rates unchanged at 1.25% (markets were pricing in a 20% chance of a rate hike) The BOC mentioned that Q1 growth had been weaker than expected (1.3% vs. 2.5%) and that growth was expected to rebound to 2.5% in Q2. Although 2018 growth was revised lower from 2.2% to 2.0%, 2019 growth was revised higher from 1.6% to 2.1%. The BOC confirms progress on inflation and wage growth reinforcing the need for higher interest rates over time. The initial reaction took USDCAD up to a 1 week high of 1.2635 before retracing to 1.2580. We now await the BOC press conference at 8:15 for further clues.
Yesterday, the downtrend in USDCAD stalled (the pairing had declined 8 days in a row until yesterday) with a climb from 1.2570 up to 1.2624. The pairing then eased lower to hold a 1.2580 – 1.2595 range for most of the North American session. Overnight, USDCAD dropped to 1.2550, just shy of Wednesday's two month low near 1.2543. The move lower was short-lived as hawkish comments by U.S. Fed members this morning has caused equity markets to fall into negative territory. USDCAD has climbed back above 1.2600 accordingly. The main risk event next week is Wednesday's Bank of Canada interest rate policy announcement. With core inflation near 6 year highs and NAFTA risk easing over the past month; it is quite possible that the BOC will raise interest rates from 1.25% up to 1.50%.
U.S. stocks rose and Treasuries retreated as investors speculated that Middle East tensions won't erupt into a destabilizing conflict. Crude slid after climbing more than 7 percent this week and the dollar gained. All major benchmarks were were higher following hints from President Donald Trump that military action in Syria may not be imminent, while Russia toned down its own war rhetoric. The calls for geopolitical calm helped equities ignore overnight trade rumblings from China, which dragged most Asian gauges lower.
U.S. stocks fluctuated and Treasuries rose as global financial markets appeared to discount rising tensions in the Middle East and renewed political discord in America. The USD stayed lower as key gauge of inflation accelerated. Most major equities indexes were down slightly but gave back much their early losses, which came after President Donald Trump's proactive comments about Russia and his warning that America's preparing to attack Syria. Crude oil continued to climb, pushing past $66 a barrel.
U.S. stocks pared losses, while haven demand eased as investors speculated that the final form of any Chinese tariffs might be less onerous than currently proposed. The S&P 500 Index cut its decline by almost two-thirds as representatives from China and the Trump administration left the door open for a negotiated solution. The proposals wouldn't take effect for months. Still, fear that tensions will escalate further hit specific sectors after China said it would levy 25% tariffs on some U.S. imports. Elsewhere inflation data from Europe rose to 1.4% in March, in line with economist expectations, further bolstering arguments for the ECB to phase out stimulus.
U.S. stocks bounced back from Monday's selloff as the rout in technology selloff eased and car makers rallied on strong sales reports. Treasuries and gold retreated. The S&P 500 climbed from the lowest level since early February after closing below the 200-day moving average for the first time since the Brexit vote almost two years ago. General Motors jumped almost 4 percent, and Nvidia rallied 3 percent. The 10-year Treasury yield pushed above 2.76 percent, while the dollar was steady. The Stoxx Europe 600 Index headed for its first decline in four days as markets reopened after the long weekend. Investors sifted through the rubble of the latest selloff in U.S. shares, with some of the hardest hit stocks rising again on Tuesday. A host of issues still confront the market, from trade angst as President Donald Trump looks for a quick win on Nafta negotiations to concern that high-flying technology shares have further to retreat.
Investors are entering the 2nd quarter on the defensive after the worst 3 months for global stocks in more than 2 years. Overnight, the MSCI Asia Pacific Index was unchanged, while Japan's Topix index closed 0.4% lower. Most European markets remained closed for the Easter holiday. As of 5:50am EST, S&P 500 futures pointed to a drop at the open, while the 10-year Treasury yield was at 2.764%. With the start of the new month, investors will have a chance to focus on a bunch of incoming economic data, including U.S. payrolls on Friday, which are expected to show unemployment fall to its lowest level since 2000. The prospect of a trade war intensified after China urged trade talks with the U.S. while saying that previously announced retaliatory measures on American imports took effect on Monday. Beyond the actions on metals, the Trump administration is preparing a proposal of other Chinese products to be targeted with tariffs and has until April 6 to release the list. In other trade-war news, President Trump threatened to pull out of NAFTA if Mexico doesn't stop people and drugs from flowing into the U.S. from Central America.
U.S. stocks tumbled and Treasuries rallied as investors shifted focus from the Federal Reserve to the threat of an escalating trade war with China that has the potential to disrupt global growth. Major U.S. equity benchmarks opened lower by more than 1 percent, with technology-heavy gauges falling more than 1.5 percent. President Donald Trump is set to announce about $50 billion of tariffs against China Thursday, according a person familiar with the matter, sparking speculation that the Asian nation will hit back. The 10-year Treasury yield slid toward 2.8 percent while the yen increased as investors sought safe havens.
Jerome Powell will grab headlines today with an all but assured rate hike in his first meeting as Federal Reserve chairman. But look to the fine print for the biggest news. With 25 basis-point rate rise seen as a done deal, the focus is on Powell's path to tighter policy. Today he'll get the chance to oversee a revision of the 2018 dot-plot forecasts that would see the central bank speed up the pace of increases to 4 from 3, driven in part by Congress's passage of a $1.5 trillion tax overhaul and $300 billion in spending. A policy statement will be released at 11am and he'll host a press conference that begins 30 minutes later.
U.S. stocks opened higher as investors looked past Facebook Inc.'s mounting data crisis, while government bond yields climbed as investors braced for higher U.S. borrowing rates.Facebook fell for s second day after Bloomberg News reported that the U.S. Federal Trade Commission is probing the company over whether it violated terms of a consent decree over its use of personal data, according to a person familiar with the matter. Also President Donald Trump is expected to announce up to 60 billion dollars in tariffs against a wide range of Chinese products.
Steve Brown, Senior Corporate Trader | Stevebrown@vbce.caThe CAD was the worst performing currency for the 3rd consecutive week. After performing quite well between mid-December 2017 – early February 2018, the CAD has been the worst performing currency in 2018 and has weakened to multi-month lows vs most major currencies. The CAD closed the previous week on a strong note and looked poised for further gains early in the week. However dovish comments from Bank of Canada governor Poloz Tuesday morning caused the CAD to broadly weaken. He mentioned that the Canadian economy could handle another 500,000 jobs added without upward pressure on wages. USDCAD broke above the key 1.30 level on Thursday and continued up towards 1.3100 to close the week.
Stocks declined globally on Monday amid a technology selloff and as investors braced for a week packed with risk events, from central bank decision to a G-20 gathering. Government bonds also fell, while the GBP jumped on a Brexit breakthrough. In a busy week, the biggest focus for global markets will be the first U.S. interest rate decision under new Federal Reserve Chairman Jerome Powell. It comes after he hinted to investors that he's open to lifting the policy rate 4 times this year, rather than the 3 currently reflected in the dot-plot forecasts. Some Wall Street banks such as Goldman Sachs Group expect the median projections to rise to 4 on Wednesday, while others say there will be no change following a round of mediocre data and policy makers' stated intentions to move gradually.
Yesterday, USDCAD climbed from 1.2942 up to 1.3070 with pull-backs limited to 1.3043. It was the first time USDCAD has closed above the 1.30 level since June 2017. Overnight, the pairing climbed to 1.3095 before falling back to 1.3064 on softer U.S. housing data. USDCAD has since bounced back to retest session highs. The JPY is the best performing currency despite positive market sentiment while the USD is the 2nd strongest performer. The commodity block (AUD, CAD, NZD) are the worst performers. The main event risk is next Wednesday's U.S. interest rate decision along with economic projections. The market is currently pricing a 94% chance of a U.S. rate hike.
Stocks gave up early gains Monday as uncertainty over the prospect of new tariffs chipped away at industrial and consumer staple shares. Treasuries gained, while most commodities fell. The S&P 500 Index retreated after opening higher, held back by manufacturers that would suffer more than most companies in a trade war. Most chipmakers maintained their gains, pushing the Nasdaq upward. Strong economic indicators seem to have given fresh impetus to the 9-year-old bull market in global equities, but stocks have been roiled lately as U.S. President Donald Trump raised the prospect of a full-fledged trade war. As we move forward the focus will remain on trade and tariffs and the potential for some shot across the bow for the Chinese given some of the recent Trump tweets. To the extent Trump continues to pick smaller items to focus in regards to trade the better, but if he ramps it up even further and that sparks significant retaliation then things could get ugly.
Viola Desmond was a successful black businesswoman who was jailed, convicted and fined for defiantly refusing to leave a whites-only area of a movie theatre in 1946. Her court case was an inspiration for the pursuit of racial equality across Canada. Viola's story is part of the permanent collection at the Canadian Museum.