The U.S. dollar is slightly firmer to start the day as the global risk sentiment soured.
Overview
U.S. equity futures are lower as Treasury yields continued to march higher. The yield on the much-watched 10-year bond rose and touched 1.96%, the highest since 2019.The buck also found support from increased bets the Federal Reserve will hike rates by 50 basis points at its next meeting. Traders now see a 40% chance of a 50-basis point hike, odds which have been climbing since last week. Market participants are heavily focused on consumer price data set to be released Thursday morning. A surprise to the upside could reinforce hawkish central bank chatter and allow the greenback to appreciate.There is little on today’s docket to move the Dollar so we expect the greenback to take its cues from risk sentiment, treasury yields, and geopolitical risks along the Russian/Ukrainian border.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro has picked up steam as the change-of-face presented thus far this year by the European Central Bank. Although there are concerns over lag in economic resurgence, the ECB has expressed a willingness to lessen its involvement in the financial system by taking away quantitative easing and even consider the need to hike its interest rate to combat inflation. European equities may take a bit of a toll, but at least the shared currency is looking more buoyant.On the geopolitical front, every EU leader has reached out to Russian leader Vladimir Putin and France’s President Emmanuel Macron said he wants nothing more than to be closer to Russia and form a much better relationship. The positive talks are indeed a change of pace as Russian diplomats have also explained their desire to calm the tensions.
CAD
The Canadian Dollar held a tight range during the overnight session but is slipping against its American counterpart in early trading. The “Loonie” is now down 0.4% from last night’s close. The price of WTI oil is down $2 a barrel adding to the downward pressure on the Canadian dollar. Oil touched a 7-year high last week, so we need to keep the retreat in oil in perspective.There is nothing on the economic docket today in Canada. The Canadian dollar could be negatively affected as the trucker protests intensify. The protests have succeeded in halting traffic at the busiest border crossing between the United States and Canada. About 1.4 million trucks entered the United States across the Ambassador Bridge into Detroit last year.
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