The U.S. Dollar remains steady following a relatively calm reaction to the Fed Minutes released yesterday afternoon.
Overview
The details behind last month’s notes showed that officials seem ready to shed the balance sheet by more than $1.0 trillion a year. Clearly, inflationary growth has become a main point of concern, but for investors and traders, there was nothing that indicated an even more aggressive outlook in terms of hawkish moves. Ultimately, the buck held on to gains from before as it seems that the tighter monetary policy planned and outlined is priced-in. Now, the focus will be on how intense the conflict could get in Ukraine and if higher prices to come will derail the economic recovery from the pandemic.Labor markets keep giving the Fed reason to stay on its path as Initial Jobless Claims for last week came in lower than expected at 166K vs 200K and the prior week’s figure was revised downward from 202K to 171K. Raw materials are also going up in price and some banks’ assessments have as much as a 40.0% surge coming in the next year. It is important to recall from our report yesterday that our monthly outlook points out how historically, periods of Fed tightening have resulted in a loss of value for the buck. The next 8 months could be quite turbulent.
What to Watch Today…
- No major economic events scheduled for today
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EUR
The Euro remains in familiar ranges after a day of hype over Fed Minutes that resulted in little to no movement against most of the greenback’s peers. The ugliness of war is making European leaders consider more serious efforts to get away from Russia as now Italian Prime Minister Mario Draghi has thrown his support at the idea of the EU banning natural gas imports if done as a united front from all member nations.Analyses across the pond reveal that a full embargo on fossil fuels would be tremendously damaging, so high tariffs that could still cripple Russia’s commercial stability are what has been recommended, maybes as high as 40.0-50.0%. The Russian Finance Ministry wants Rubles and is also creating impediments on their end. The flow of energy threatened means incredibly volatile times across the continent and no clarity on benefit for the buck.
CAD
The Canadian Dollar fell by about half a percent overnight following news from the International Energy Agency that they expect a significant increase in oil supplies. Crude oil fell by almost 5.0% yesterday as the IEA said that there will be an additional increase in production accompanying the move by the White House to release reserves. Although the Bank of Canada is expected to follow in the Fed’s tightening footsteps, there needs to be good data down the line to merit further interest rate hikes. Employment on Friday will serve as the last major release of indicators before the BOC’s April 13th meeting.
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