The U.S. Dollar is trading in familiar ranges, mostly stronger against Euro and few other peers.
Overview
Over the weekend, Europeans exuded outrage at reports of atrocities by Russian troops as they finally started to roll back from Kyiv. The sightings and reports of war crimes is making EU leaders vow for stricter measures against Russia although Moscow is now back in contact with Ukrainian leadership holding peace video chats. Treasuries and the buck are benefitting from the lack of clarity in the conflict. WTI Crude oil rose once again above $100.0/barrel from fears surrounding the war’s length as well as concerns over China’s COVID resurgence, which has shut down ports, even Shanghai.The recessionary talk could continue this week with yet another pre-recessionary sign showing in the yield curve. For the first time since 2007, the 2-year yield has climbed above the 30-year-treasury yield. Officials from the Federal Reserve have been hinting at the chance of a 50-basis-points hike in May based on rising inflation and a strong labor market, but economists worry that indications that the economy will slow down significantly are not being taken seriously.
Meanwhile, equities could be set for a hot day as Twitter and Tesla both jump on Elon Musk’s moves and positive headlines that China’s financial regulators will make it easier to audit companies listed offshore.
What to Watch Today…
- Factory Orders FEB 10 AM
- Durable Goods Orders FEB 10 AM
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EUR
The Euro remains subdued and looks to have room to lose despite reports over the weekend that the European Central Bank will be looking to tighten their policy. Isabel Schnabel, an ECB member with a history of hawkish sentiment, explained that regardless of the war, it is prudent for the ECB to start “normalizing policy.” The commentary comes after a week that demonstrated Consumer Price Index across the continent have all exceeded expectations and are at multi-year highs.
CAD
The Canadian Dollar is recovering a bit as barrels of oil go up in price and as a beneficiary central bank policy divergence. The strong labor sector numbers from last week in the U.S. solidify the North American situation, which is also showing tight labor markets in Canada. Unemployment rates going down and higher-than-forecast growth in hourly wages have set the Bank of Canada on course to tighten further. We could see a good week for the “Loonie” if the trend continues.
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