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On June 12, the Shenzhen Stock Exchange announced that it had taken self-regulatory measures against 175 cases of abnormal securities trading this week, involving abnormal trading situations such as intraday price manipulation and false declarations; it also investigated 8 major events of listed companies and reported 1 suspected case of illegal and irregular activities to the China Securities Regulatory Commission.On June 12th, Santander analysts stated in a report that they expect the Bank of England to keep interest rates unchanged next week, but will remain vigilant. They noted, "Policymakers are likely to believe that current monetary policy conditions remain sufficiently tight to buy time while assessing the specific threats of sustained inflationary risks stemming from the Middle East shock." Currently, slowing inflation and a weak labor market suggest a limited risk of a second round of price increases, but this could change if the war with Iran continues. "Ultimately, if the duration of the crisis remains a major concern after the summer, we believe there is a high probability that the Bank of England will be forced to raise interest rates in September."At the start of the night trading session, domestic futures contracts showed mixed results, with Shanghai silver rising nearly 2% and Shanghai gold rising over 1%. On the downside, SC crude oil fell nearly 3%, low-sulfur fuel oil (LU) and fuel oil fell over 2%, and liquefied petroleum gas (LPG) fell nearly 2%.The Venezuelan government condemned the oil spill in Trinidad and Tobago in a statement.EU member states have reached a consensus on expanding carbon border taxes.

As US Inflation Data Looms, the USD/CAD Tracks Oil's Failure To Move Above 1.3300

Alina Haynes

Feb 14, 2023 14:44

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The USD/CAD shows the market's caution as traders anticipate Tuesday morning's release of the US Consumer Price Index (CPI) for January. After a two-day decline, the Canadian dollar-U.S. dollar pair holds a position near 1.3330.

 

However, the most recent decrease may be a result of the US Dollar's inability to maintain its earlier weekly gains in the face of falling US Treasury bond yields. Nonetheless, the declining price of Oil, Canada's principal export, and the Federal Reserve's (Fed) hawkish pronouncements are enticing USD/CAD bulls.

 

Concerns about additional releases from U.S. strategic petroleum reserves have kept the price of WTI crude oil below $79,50 a barrel (SPR). According to Organization of the Petroleum Exporting Countries (OPEC) Secretary-General Haitham Al Ghais, the price of black gold disregards earlier reports anticipating a supply constraint as a result of Russia's threat to reduce output and the anticipation of increasing energy demand.

 

Fed Governor Michelle Bowman reportedly told Reuters that the Federal Reserve will continue to raise interest rates until they reach a suitable level to return inflation to the target rate. President of the Federal Reserve Bank of Philadelphia, Patrick Harker, dismissed speculations of a 2023 Fed rate cut. Nonetheless, the official stated, "The Fed is unlikely to decrease interest rates this year, but could do so in 2024 if inflation begins to decline."

 

Notably, it appears that the recent decrease in US inflation expectations from a multi-day high has weighed on US Treasury bond yields and the US Dollar. The Federal Reserve Bank of St. Louis (FRED) 10-year and 5-year breakeven inflation rates decrease from monthly highs to 2.31 percent and 2.44 percent, respectively.

 

As Wall Street closes in the green, S&P 500 Futures follow the sentiment with slight gains, which weigh on the US Dollar. As a result, 10-year US Treasury note yields decline by around two basis points to 3.69 percent at the latest.

 

Since recent Federal Reserve (Fed) pronouncements indicating potential rate hikes appear muted, USD/CAD traders should keep a close eye on the US CPI data in the near future. In addition, discussions regarding the Fed's policy shift are approaching, so any negative US inflation data will not hesitate to send the Loonie pair down. Likewise, monitoring the price of oil is vital.

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