The U.S. dollar is modestly stronger this morning, but you would be forgiven for not noticing much of a difference from yesterday’s ranges.
Overview
Yesterday. St. Louis Fed Bank President James Bullard continued his call for more aggressive interest rate increases. His comments come after Fed Chief Powell made hawkish comments earlier this week. Market participants are upping bets that the central bank will hike rates by 50 basis points instead of just 25 at their May 4th meeting. A quarter-point hike is already fully priced in and currently, odds for a 50-basis point hike are at 74%. For comparison’s sake, odds were only 35% for a 50-basis point hike one week ago.There are no less than four Fed speakers on this morning’s agenda and we expect them all to maintain a hawkish outlook for future policy. This morning’s economic docket showed that durable goods orders decreased 2.2%, missing expectations of a 0.6% decline. A separate report showed continued good news for the labor market with both initial jobless claims and continuing claims coming in close to expectations. S&P Global’s PMI readings are due out at 10 a.m.
What to Watch Today…
- Four Fed Speakers this morning
TOP SPOT AGAIN! | #1 G10 Forecaster for 6th Time
Bloomberg ranks Monex USA (formerly Tempus) for top G10 Forecaster, NZD, CHF, AUD, MXN, and GBP! Learn More
JPY
The Japanese yen remains near a 6-year low versus the U.S. dollar with many analysts expecting the weakness to continue. As the yen deviates from its historical ranges, we will keep a close eye on possible intervention by Japanese policymakers. But for the time being, it appears leaders are fine with the yen’s depreciation.
Indeed, Bank of Japan board member Goushi Kataoka said that the impact of a weaker yen is overall positive. He continued on to say that he doesn’t see monetary policy shifting towards tightening, highlighting the growing policy differential between the U.S. and Japan. The yen has weakened by over 5.0% in the past 30 days.
CAD
After suffering steep losses at the beginning of the month, the Canadian dollar continues its comeback. USD/CAD has moved lower for eight consecutive sessions which would represent the best winning streak for the loonie since January 2019. The Canadian dollar is benefiting from higher oil prices and on speculation that President Joe Biden will announce new, tougher sanctions on Russia today. There are reports that the U.S. and Europe are closing in a deal that would cut demand for Russian energy in an attempt to further isolate Russia. However, it is unclear that the deal would have a exert downward pressure on the price of oil so the loonie may continue to enjoy stronger ranges.
Ready to spin the currency market moves in your favor?
DISCOVER HOW WE CAN HELP YOU SEND or RECEIVE PAYMENTS
