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CAD

Calmer Heads Prevail?

A sense of cautious optimism is returning to financial markets this morning as investors bet contagion risks at regional banks in Europe and the United States have been largely contained. All of the major currency pairs are trading within relatively tight ranges, Treasury yields are inching back from last week’s selloff, and equity futures are setting up for a stronger open. Oil prices are rising, gold is falling, and the Canadian dollar – again functioning more like a risk proxy than a national currency unit – is climbing against the greenback. Signs of stability are returning. European bank shares climbed through the...

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TGIF?

As 2023 unfolds, “Thank God It’s Friday” is rapidly becoming “Oh No, It’s Friday”. Risk appetites are shrinking across the financial markets this morning as investors brace for a weekend that could follow its predecessors in bringing more scary news. The dollar is pushing higher against all of its major non-Japanese counterparts, two-year Treasury yields appear headed back toward the lows reached earlier in the week, and futures suggest equity indices are setting up for a weaker open. North American crude futures are exchanging hands near $67 a barrel, below levels at which the Biden administration had committed to refilling...

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All eyes on the US Fed

• Positive vibes. Equities and bond yields are higher as sentiment regarding the banking situation continues to improve.• US Fed in focus. While a case can be made for the Fed to hold steady, we think it is more likely that it delivers another 25bp hike. And continues to stress that ‘restrictive’ settings will be needed for some time.• AUD underperformer. Comments that the RBA will “reconsider” a pause in April have weighed on the AUD. Policy divergence can keep the AUD on the backfoot. Risk sentiment has continued to recover. The recent moves by authorities to support the banking...

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Chartbook: March 21

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Canadian Inflation Eases, Pulling Loonie Lower

Headline Canadian inflation slowed sharply and a number of underlying price indicators continued to ease last month, effectively releasing pressure on the Bank of Canada to raise rates for a final time in this tightening cycle. Data released by Statistics Canada this morning showed the Consumer Price Index rising 5.2 percent on a year-over-year basis in February, falling well under the 5.9 percent increase recorded in January, and below consensus expectations for a 5.4 percent increase. On a month-over-month basis, the change slipped to 0.4 percent – missing a forecasted 0.5 percent increase. Gasoline prices fell -4.7 percent year-over-year, driving the energy...

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