Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3810-1.4060
Euro 1.5970-1.6220
Sterling 1.8530-1.8780
WTI Oil (opening level) $89.50
The CAD/USD is opening at 1.3931 ( 0.7178 )
A slump in precious metals gathered momentum on Tuesday, with gold and silver falling below USD 4,200 and USD 64, respectively, as rising US inflation concerns and growing expectations of Federal Reserve rate hikes continued to pressure sentiment. The move is forcing investors with long-held bullish positions to reassess the outlook, particularly as higher inflation and tighter monetary policy create a less supportive environment for non-yielding assets. In gold, attention now turns to the March low and 38.2% retracement of the 2022 to 2026 rally in the USD 4,075 to USD 4,100 area.
Headlines
· The US launched new strikes against Iran after an American helicopter was downed, heightening concerns over a fragile ceasefire and longer-term peace prospects. Trump ordered the “self-defense” strikes, while Iran warned it would not leave any attack unanswered, saying it had targeted 21 US arial and navel targets across the region.
· US existing home sales rose 3.2% to 4.17 million annualized, beating expectations despite high mortgage rates. Gains were strongest in the Midwest and South, modest in the Northeast, and flat in the West. Inventory rose 3.3% to a 10-month high, reaching 4.5 months of supply.
· The US trade deficit narrowed to $55.9 billion in April from $56.6 billion, beating expectations. Exports rose 2.6% to a record $327.1 billion, led by capital goods, industrial supplies, and consumer goods, while services slipped. Imports increased 2.0% to $383.0 billion, driven by higher capital goods and service purchases.
· Japan’s producer prices rose 6.3% yoy in May, up from 5.3% and above the 5.5% forecast, the fastest since March 2023 amid higher energy costs. Month-on-month, prices rose 0.9%, down from April’s revised 2.8%.
· US private employers added an average of 29,000 jobs per week in the four weeks to May 23, down from 30,500 and marking a third week of easing growth. Still, ADP’s May report showed a solid 122,000 net job gain, with hiring more broad-based and momentum intact into summer.
· The combination of stronger payrolls and uncomfortably elevated inflation has led bond traders to rush into positions targeting multiple Fed interest-rate hikes in the coming months, with some looking for a move as early as the September policy meeting. Ahead of Friday’s strong payroll print hedge funds held a record net short positions in SOFR futures.
Key Points
· Equities: US and Europe slipped as AI stress spread, Asia weakened as geopolitics revived risk and Korean tech swung hard.
· Volatility: CPI, VIX higher, US-Iran tensions, downside skew
· Digital Assets: Bitcoin below $62k, ETF outflows easing, defensive positioning, CPI catalyst
· Commodities: Precious metals slump deepens as rate hike fears take hold; oil shrugs off renewed Middle East escalation
· Fixed Income: US treasury yields quiet ahead of May US CPI release.
· Currencies: AUD weakness continues as USD unreactive to wild volatility in US stocks. EURCHF hits new local high.
· Macro: US May CPI, Bank of Canada Rate Announcement, US Treasury to auction 10-year notes