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CAD

20 Sep 2023

Compromising positions

Ahead of this afternoon’s Federal Reserve meeting, we note that speculators have sharply reduced short positions against the dollar in the last month, with the capitulation coming after a series of stronger-than-expected data releases widened expected performance gaps between the United States and the rest of the global economy. Friday’s numbers from the Commodity Futures Trading Commission showed the net dollar position on the verge of flipping into bullish territory, with long trades on the euro tumbling sharply relative to levels earlier in the year. The net non-commercial futures position on the dollar against the G10 currencies plus the Mexican...

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20 Sep 2023

Pound stumbles, dollar steadies into Fed decision

Participants across the equity, fixed income, and currency markets are holding their collective breath this morning, with many waiting for this afternoon’s rate decision from the Federal Reserve to provide clarity before adjusting positions. Stock markets are setting up for a steady open, 2- and 10-year Treasury yields are virtually unmoved, and the dollar is little changed. Oil benchmarks are giving back some of yesterday’s gains. Prices rose significantly less than expected in the UK last month, giving the Bank of England some breathing room ahead of tomorrow’s rate decision. Numbers published by the Office for National Statistics this morning...

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19 Sep 2023

US Fed in focus

• Some jitters. Rising oil prices & higher Canadian inflation boosted bond yields. Equities were flat. The USD consolidated & AUD ticked up.• US Fed. No policy change is anticipated tomorrow. Focus will be on the Fed’s guidance & forecasts. Markets are already pricing a ‘higher for longer’ view.• Event radar. In addition to the US Fed over the next few days UK CPI (today) is released & the BoE meets (tomorrow). The BoJ meeting is on Friday. A few jitters across markets overnight ahead of tomorrows US Fed decision and press conference (4am and 4:30am AEST). Equities were flat...

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19 Sep 2023

Slippery relationships

Expectations for more tightening from the Bank of Canada have shot up since this morning’s hotter-than-anticipated inflation report, with at least one hike priced in by the March meeting in early 2024. The loonie has jumped even more aggressively, reflecting oversold conditions going into the release (which were arguably reinforced by the psychological bias known as “round number anchoring” around the 1.35 mark) and a supportive oil-price backdrop. But don’t expect the effect to last.  For much of the last few decades, the Canadian dollar seemed to act like a “petro-loonie”, with oil prices playing a big role in driving...

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19 Sep 2023

Canadian inflation accelerates, shaking bets on policy hold

Canadian inflation accelerated in August, but gasoline prices drove much of the gain and many underlying price indicators continued to soften, helping ratify the Bank of Canada’s cautiously hawkish, data-dependent stance. Data released by Statistics Canada this morning showed the Consumer Price Index rising 4 percent on a year-over-year basis in August, up from the 3.3 percent increase recorded in July, and slightly above consensus expectations. On a month-over-month basis, the change climbed to 0.4 percent – beating market forecasts that had been set closer to the 0.2 percent mark. Gasoline prices rose 4.6 percent month-over-month, and the energy sub-index...

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