While a Bank of Canada hold is widely expected, it's the looming US-Canada trade tensions and the outcome of Canada's late-April election that may shape the CAD's path.
Q1 GDP growth remained solid at 5.4% y/y, providing a cushion to meet the annual growth target. March real activity growth beat market consensus by a significant margin; outlook remains cautious.
Much has happened since the US 'Liberation Day' on 2 April. Tariffs have been introduced, only to be partially suspended. Negotiations have begun, though seemingly without much prospect of success. And new tariffs are already being planned. Of course, all this has not left the markets unscathed.
Despite global equity market moves, EUR/JPY is diverging from its usual correlations, driven by a dollar sell-off and repatriation flows from Europe and Japan.
EUR/USD recovers strongly to near 1.1390 during European trading hours on Wednesday after a slight correction on Tuesday. The major currency pair strengthens as the US Dollar (USD) resumes its downside journey after a short-lived recovery move.
Citing a person familiar with the Chinese government’s thinking., Bloomberg reported on Wednesday that China is willing to sit across the table with the US. However, Beijing has some preconditions for the trade negotiations.
EUR/JPY rebounds after two consecutive sessions of losses, trading near 162.00 during Wednesday’s European hours. The currency cross strengthens as the Euro (EUR) gains traction against its peers, supported by real money flows as investors hedge Dollar exposure or repatriate US assets.
Bank of Canada (BoC) Governor Tiff Macklem addressed the central bank’s policy outlook and answered questions from the media after the BoC paused its easing cycle in April.
GBP/USD continues to benefit from broader dollar weakness and reserve diversification trends, with FX managers potentially trimming dollar holdings in favor of currencies like sterling. The pair also closely follows EUR/USD moves, as Europe embraces fiscal stimulus.
Dollar Index (DXY) inched modestly higher overnight but continues to trade near recent lows. Trump launched a probe into the need for tariffs on critical minerals, the latest action in an expanding trade war that has targeted key sectors of the global economy.
The Japanese Yen’s (JPY) solid current account and foreign asset position continue to pressure USD/JPY lower, even as the rare decoupling from US Treasury yields unfolds. While this divergence may prove short-lived, markets could settle into a lower USD/JPY as Fed cuts materialize later this year.
The Euro (EUR) is consolidating as markets digest tariff concerns and await the ECB meeting, where a 25bp rate cut is expected. While bullish momentum continues, dovish ECB rhetoric or pushback on recent euro strength could limit further gains.
NZD/USD continues its winning streak for the sixth successive day, trading around 0.5910 during the European hours on Wednesday. The pair appreciates as the New Zealand Dollar (NZD) gains ground following the release of key economic data from China.
The US Dollar Index (DXY), which measures the US Dollar (USD) against a basket of six major currencies, declined after gaining in the previous session, trading near 99.50 during Wednesday's European hours.
West Texas Intermediate (WTI) Oil price falls on Wednesday, early in the European session. WTI trades at $60.29 per barrel, down from Tuesday’s close at $61.01. Brent Oil Exchange Rate (Brent crude) is also shedding ground, trading at $63.66 after its previous daily close at $64.36.
West Texas Intermediate (WTI) Oil price continues its decline for the third consecutive session, losing over 1.00% and trading near $60.30 per barrel during early European hours on Wednesday.
The Pound Sterling (GBP) faces selling pressure against its major peers on Wednesday, except the US Dollar (USD), after the release of the softer-than-expected United Kingdom (UK) Consumer Price Index (CPI) data for March.
Nvidia reportedly did not inform some of its major customers about the new US export rules despite being told about a week ago requiring it to obtain licenses
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