Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3640-1.3890
Euro 1.5850-1.6100
Sterling 1.8370-1.8620
WTI Oil (opening level) $100.63
The CAD/USD is opening at 1.3764 ( 0.7265 )
Canada's Consumer Price Index inflation climbed to 2.8% YoY in April from 2.4% in March, driven largely by a surge in gasoline prices after the Iran war pushed global crude oil prices sharply higher. This figure registered the highest level in two years. However, the reading came in below the market expectations of 3.1%. A softer-than-expected Canada inflation report could weigh on the CAD and against the USD in the near term.
Trump said on Wednesday the US is in the "final stages" with Iran, bolstering hopes that crude supplies will soon start flowing out of the Strait of Hormuz.
Optimism over a possible US-Iran agreement might drag the crude oil prices lower, weighing on the commodity-linked CAD. It is worth noting that Canada is a major oil-exporting country, and lower crude oil prices generally have a negative impact on the CAD.
Minutes of the April Federal Open Market Committee (FOMC) meeting released on Wednesday showed that a majority of Federal Reserve officials warned the central bank would likely need to consider hiking interest rates if inflation continued to run persistently above their 2% target.
The minutes highlighted the deepening concern among Fed officials about inflationary pressures driven by the Iran war. The hawkish stance of the US central bank could lift the USD against the CAD.
Headlines
· Oil fell, easing inflation and rate hike fears, helping bonds and stocks rebound, on renewed optimism over a US–Iran peace deal, after Trump said talks are in their “final stages” and the Strait of Hormuz may soon reopen.
· Fed minutes still flagged a possible rate hike this year if inflation stays above 2%, leaving markets divided on whether the Fed will move by December.
· Australia April Employment data was far softer than expected, with a -18k drop in Employment vs. +15k expected and a sharp rise in the Unemployment Rate to 4.5% versus 4.3% expected and 4.3% in March.
· Australia’s composite PMI fell to 47.8 in May from 50.4, signaling renewed contraction as both services and manufacturing weakened amid the Middle East conflict. New orders dropped at the fastest pace since September 2021, and employment fell for the first time in 18 months, with the sharpest job losses in nearly six years. Input costs rose sharply on higher fuel, raw materials, and transport, while business confidence hit a record low on rising costs, rate-hike risks, and tough market conditions.
· The average US 30-year fixed mortgage rate rose 10 bps to 6.56% in the week ending May 15, 2026, the highest in seven weeks, per the MBA. Rates climbed for a fourth straight week on higher Treasury yields amid inflation and debt concerns. Total mortgage applications fell 2.3%, with purchase applications down 4.1% and refis down 0.1%, pushing overall activity to a five-week low.
· Japan's April exports rose 14.8% year-over-year, beating the estimated 9.2% increase, with exports to the US up 9.5% and exports to the EU rising 26.9%.
Key Points
· Equities: US and Europe rallied on easing oil stress, while Asia lagged before Nvidia reignited the chip trade.
· Volatility: VIX falls, Nvidia supports AI sentiment, KOSPI jumps 8%, bond yields elevated
· Digital Assets: Bitcoin stabilises near USD 77k, IBIT and ETHA rebound despite ETF outflows, miners outperform
· Fixed Income: Global yields punched lower on big drop in crude oil prices
· Currencies: USD eases off recent highs amidst low volatility, AUD lower on weak April employment data
· Commodities: Oil tumbles, gold rebounds as Trump once again raises hopes for Iran deal