Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3710-1.3960
Euro 1.5970-1.6220
Sterling 1.8460-1.8710
WTI Oil (opening level) $89.98
The CAD/USD is opening at 1.3830 ( 0.7231 )
USD/CAD is looking for direction, as investors await developments from the US-Iran peace process.
Beyond that, the hawkish repricing from the US Federal Reserve- which is now expected to hike rates at least once this year- is providing additional support to the USD. The Bank of Canada, on the other hand, faces a more challenging environment, with a labour market muddying the bank’s rate path.
USD/CAD trades above last week's high, of 1.3820. So it's bullish for now. We now seem to be on the path towards the April 8 and 12 highs, at the 1.3875 area.
Downside attempts, on the other hand, remain contained above the confluence of trendline support and Monday's lows in the 1.3790 area. A confirmation below here would shift the focus towards May 18 and 20 lows, near 1.3730
Headlines
· Crude oil held steady with the US touting progress toward a peace deal with Iran, despite fresh hostilities and uncertainty over the Strait of Hormuz, and the timing of an eventual reopening. One contentious issue under discussion is Iran’s $24 billion in frozen assets, with Tehran wanting half that amount released upon the signing of an agreement. In addition, Tehran’s reluctance to allow ships free passage through the strait and Trump's desire for Iran to commit to handing over or destroying its stocks of highly enriched uranium.
· Hawkish hold from the RBNZ. The Reserve Bank of New Zealand kept its Official Cash Rate unchanged at 2.25% as expected, but an evenly split vote only decided by Governor Breman’s vote in favour of no change avoided a hike. The guidance and forecast adjustments from the RBNZ meeting were more hawkish than anticipated, sending the New Zealand dollar sharply higher. The market now anticipates a hike at the July RBNZ meeting after the bank said that the key policy rate will most likely need to rise more and sooner than previously anticipated.
· Korean memory chip maker SK Hynix rose more than 12% on Wednesday, taking the company’s valuation north of USD 1 trillion. The massive demand for memory chips has allowed the few manufacturers in this space to enjoy unprecedented margins. Despite the advance in the share price year-to-date of more than 250%, the forward P/E of the company is only slightly more than 8.
Key Points
· Equities: U.S. and Asia rode the AI chip wave higher, while Europe slipped as oil and geopolitics re-entered the chat.
· Volatility: VIX contained, mild downside skew, SPX records, PCE ahead, oil and Middle East in focus, selective hedging remains active
· Digital Assets: Bitcoin softer, Ether stable, ETF outflows persist
· Fixed Income: US treasury yields lower still as crude oil prices drop
· Currencies: Majors sluggish with JPY weakest. NZD bolts higher on hawkish RBNZ
· Commodities: Oil steady as markets await Middle East developments, gold trapped in narrowing range