Daily Market Update

Risk-aversion flattens FX, Taiwan faces challenge

April 03, 2024

The U.S. Dollar is trading mostly flat across the board as markets seem to resign themselves to the idea that central banks will not all act in tandem to provide an accommodative financial environment.


As the Fed’s chances of hiking in June dropped, enthusiasm for equities faded, and investors are looking for alternatives. Domestically, the economy seems as steady as ever, with ADP Employment figures from March revealing more jobs added than expected at 184K vs. 150K. Later at 9:45 AM, the S&P Global Purchasing Managers Index will likely show ongoing expansion, further solidifying the Dollar’s recent resurgence.

Globally, markets are reacting to the biggest earthquake to hit Taiwan in 25 years with many wondering if this will affect chipmaking in a big way. Taiwan Semiconductor Co. halted its plants. Before the natural disaster, there were already concerns with the productivity of profitability of chipmakers such as Intel.

Oil prices rose following a meeting in which OPEC+ members agreed to keep supply cuts. It is worth noting that after an excellent 2023 and Q1, Bitcoin values are rapidly falling as it correlates with other risk-markets. Tomorrow, we will get commentary from several Fed speakers who will likely echo Fed Chairman Jerome Powell as he speaks later at Stanford University.

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The Euro had fallen to its weakest point since mid-January, but it is trying to mount a slight comeback. There is hope tomorrow that PMI surveys exude confidence in the growth of the Euro-zone. Earlier, Consumer Price Index from last month remained somewhat high at 2.4% annual average, but the monthly pace was higher than in February. Eventually, the European economy will have some wins, likely they will emanate from a growing need to defend the continent from aggression and deter terrorism.


The Canadian Dollar is in quiet ranges as this week is characterized by a slow return to activity from the Easter holidays, and markets digest the breaking news out of Taiwan. Along with the collapse of the Key Bridge in Baltimore, heavy infrastructure is facing challenges and causing havoc for trade. Unlike the post-pandemic re-opening period, national economies and central banks are no longer acting in unison or with the same goals in mind. This will be tested as the Bank of Canada meets next week on April 10th. While chances are low for cuts to come, we have already seen a G-10-member act “dovishly.”


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