The US$ is flat, oil prices advance, equity markets gain, while US yields are mixed as markets steady await Wednesday's US inflation report. The US$ steadies, European shares edge higher as energy & bank stocks rebound, while commodity prices gain as markets shift focus to Wednesday's US inflation report. In the US Warren Buffett predicts earnings decline saying the "The majority of our business will report lower earnings this year than last year" and went on to say During the last six months or so, the "incredible period" for the US economy has been coming to an end. This week, US Wholesale inventories Monday, President Biden to meet congressional leaders on debt limit, & NY Fed Williams Speaks, Key US Inflation Report Wednesday, Thursday sees China Inflation report, UK BoE rate decision, US PPI & Initial Jobless Claims, G& Ministers & Central Bankers meet in Japan and Friday US Michigan consumer sentiment.
In other news. Treasury Secretary Yellen warns of 'economic chaos' unless Congress raises debt ceiling. Binance lifts block on bitcoin withdrawals amid heavy volumes. Russia rains missiles across Ukraine ahead of May 9th Victory day holiday. German industrial output slumps as recession fears rise. Russia's energy sector hit as Kremlin forced to increase tax. Armenia & Azerbaijan to resume peace talks in Brussels. Brussels plans sanctions on Chinese companies aiding Russia's war efforts in Ukraine. Western companies warn of hit from China's slow economy.
In currency markets. The US$ index is sitting steady, the GBP edges higher on expectations the BoE will hike interest rates on Thursday. Commodity currency turn positive as prices improve. CNY eases on growth concerns and widening interest rate differentials. CNY slips 0.1% while Asian currencies are flat on average vs US$. Trading currencies are mixed with SEK weakens 0.2%, JPY down 0.1% while MXN is flat, CHF up 0.25%, ZAR, AUD & NZD strengthen 0.6%, NOK rallies 0.7% vs US$.
Oil prices strengthen almost 2% in early trading after 3-weeks of straight weekly declines as easing US recession fears shifted market focus to tightening supplies. C$ extends gains as commodity prices improve, the US$ remains sidelined and as investors dial back expectations of interest rate cut for the BoC. Friday saw the loonie gain over 1% retesting multi-week highs as investors turned bullish following the stronger-than-expected domestic jobs data raised the possibility the that the BoC may review its interest rate pause strategy. Today we expect markets to be somewhat sidelined today after Friday's volatile session, with a very light economic docket today we expect investors to keep their powder dry until Wednesday's key US inflation report. Support resets to 1.3310 while resistance lowers to 1.3400
EURCAD steadies after Friday saw C$ rally 1.3% vs Euro as the prospect of BoC lowering interest rates in 2023 faded after the stronger-than-expected jobs data. Support resets to 1.4700 while resistance lowers to 1.4800.
EUR slips from intraday highs after EU Sentix data. The downbeat Eurozone Sentix Investor Confidence data capped Euro bulls, but the single currency finds support on a broadly weaker US dollar. Friday's strong US jobs data revealed that the US labor market remains relatively tight, investors still expect the Fed may pause at its June meeting which is providing an underlying support to the Euro. Domestically, German industrial production weakened more-than-expected in March, partly due performance by the auto-sector, spurring fears again in Europes largest economy. Markets are expected to be sidelined heading into the North American trading session with a light US economic docket. Support holds at 1.0970 while resistance remains at 1.1080.
GBPEUR is steady as both currencies appear sidelined heading into Wednesdays US inflation report. Support holds at 1.1400 while resistance is steady at 1.1500.
GBP holds near yearly highs as markets anticipate a BoE rate hike on Thursday. The pound holds on to positive gains retesting 1-year highs at 1.2650 on a combination of dovish Fed expectations while the BoE in an effort to tame double digit inflation levels is expected to raise interest rates again on Thursday. The UK markets are closed for a long weekend after King Charles coronation on Saturday. We expect the pound to be somewhat sidelined heading into the Wednesday's US inflation report and Thursday's key BoE interest rate decision. Support holds at 1.2580 while resistance resets to 1.2715.
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