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CAD

Rangebound Markets Await Bank of Canada Decision

With a paucity of potential volatility catalysts on the week’s calendar, markets remain broadly rangebound this morning. Equity futures are inching down ahead of the opening bell, Treasury yields are practically unchanged, and the dollar’s recent gains are fading relative to the euro and pound. Chinese exports fell dramatically in May, suggesting that a long-expected post-pandemic drop in Western goods demand is taking a toll on the world’s second-largest economy. According to data released by the Customs Bureau last night, exports fell -7.5 percent year-over-year in May, well beyond the -0.4 percent consensus, and the worst print since January. The country nonetheless...

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RBA hammer blow

• Quiet night. Equities a little higher. Bond yields consolidated. The USD index edged up slightly. AUD held onto its post RBA gains.• RBA hike. Cash rate now 4.1% with inflation concerns stepping up. We expect another hike. FX is a relative game. AUD is also influenced by global trends.• AUD events. RBA Governor Lowe speaks today & Q1 AU GDP is released. China trade data is also due. Bank of Canada meets tonight. An uneventful night for markets with limited news flow and no major economic releases. European and US equities ticked up. The US S&P500 rose by ~0.2%,...

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Firming Rate Expectations Push Dollar Higher

With investors increasingly convinced the Federal Reserve will follow through on its “higher for longer” mantra – at least through the latter half of the year – the dollar is kicking another week with solid gains. Firming expectations for a July hike – coupled with a removal of bets on late-year cuts – are tilting rate differentials in the greenback’s favour, with the two-year Treasury yield holding near 4.54 percent, up from 4.06percent at the end of April. The pound, euro, and yen are all on the defensive, failing to break higher as relative growth expectations erode.  Friday’s non-farm payrolls report provided...

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Falling Rate Expectations Snap Dollar’s Momentum

Equity futures and risk-sensitive currencies rose slightly last night after the US Senate passed compromise legislation designed to raise the debt ceiling. The ironically-named Fiscal Responsibility Act, which moved through the voting process with extraordinary speed, will suspend the statutory limit on federal borrowing until January 2024, averting a possible default without imposing major constraints on government spending. The measure is now headed to the president for signature. But the real action came earlier in the day, when a series of data releases combined with increasingly-dovish Federal Reserve rhetoric to put Treasury yields and the dollar under pressure.Following Wednesday’s comments from...

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Currency Markets Consolidate Ahead of Critical Non-Farm Payrolls Report

An easing in tail risks is helping lift global markets this morning after the US House of Representatives passed a bill to raise the debt ceiling. The measure passed by a 314-117 margin late last night, with Democrats joining with centrist Republicans to push the bill forward for approval in the Senate. Although disappointing earnings estimates are weighing on several of the biggest tech names, equity futures are broadly higher, Treasuries are reversing yesterday’s rally, and the dollar is edging upward against most of its major counterparts. The number of US employment vacancies jumped unexpectedly last month, further firming odds...

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