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According to EuroPravda, the Czech president stated that the goal of supplying Ukraine with 1.8 million rounds of large-caliber ammunition this year has been achieved.Iranian media reported that 18 crew members of a foreign oil tanker seized in the Gulf of Oman have been detained on suspicion of transporting "smuggled fuel."On December 13th, Han Wenxiu, Deputy Director of the Central Financial and Economic Affairs Commission and Director of the Central Rural Work Leading Group Office, stated that to ensure the success of next years economic work, it is essential to adhere to the principle of seeking progress while maintaining stability, improving quality and efficiency, strengthening counter-cyclical and cross-cyclical adjustments, and effectively enhancing the efficiency of macroeconomic governance. Since the Politburo meeting on September 26th last year, a series of policies and measures have been introduced and implemented, and additional policies will be introduced and implemented next year based on changes in the situation. It is crucial to leverage the integrated effect of existing and new policies to promote steady and positive economic growth. The market economy is largely an expectation economy; therefore, it is necessary to improve the expectation management mechanism, conduct effective economic publicity and public opinion guidance, respond promptly to market concerns, and effectively boost social confidence.On December 13th, it was reported that an EU official stated on the 12th that Ukraines accession to the EU before 2027 is "absolutely impossible." According to reports, a European diplomat said that Ukraines accession to the EU before 2027 is "extremely difficult," and it is unclear whether EU leaders support this plan. Hungarian Prime Minister Viktor Orbán stated on the 8th that the EUs admission of Ukraine would be tantamount to declaring war on Russia, and that the EU is preparing for war with 2030 as the target date.On December 13, Venezuelan President Maduro stated that the United States usual tactics of lying, coercion, extortion, and threats are "completely ineffective" and "will never work" against Venezuela, following the recent seizure of an oil tanker in waters near Venezuela and the announcement of new sanctions.

As Oil Bears Take a Break and Focus on the Federal Reserve and Geopolitics, USD / CAD Reverses from a Multi-Day High

Alina Haynes

Feb 23, 2023 14:57

USD:CAD.png 

 

As it reverses from a seven-week high marked the day before on Thursday morning, USD/CAD accepts offers to reestablish the intraday low near 1.3540. Consequently, the Loonie pair suffers its first daily loss in three days, amidst market consolidation and cautious optimism.

 

Nevertheless, the absence of Japanese traders due to the Tokyo holiday has joined the previous decline in US Treasury bond yields and a decline in US inflation expectations to influence the most recent USD/CAD exchange rate. The 10-year and 5-year breakeven inflation rates from the Federal Reserve Bank of St. Louis (FRED) indicate a decline in US inflation expectations by falling from the multi-day high.

 

On a similar trajectory, Canada's primary export commodity, WTI petroleum oil, may experience a reversal. The black gold fell to a 13-day low after losing nearly 3.0% the previous day due to lackluster US inventories and a strong US Dollar. However, as of press time, the energy benchmark has posted modest gains and is trading near $74,00.

 

Despite recent market consolidation, USD / CAD buyers remain optimistic due to hawkish Federal Reserve (Fed) and geopolitical concerns.

 

In terms of geopolitics, US President Joe Biden believes that his Russian counterpart is incapable of using nuclear weapons by renouncing an international treaty. The most recent round of negotiations between the West and China has exacerbated the Ukraine-Russia conflict, which has yet to dispel the concerns surrounding it. The Wall Street Journal (WSJ) reported recently that the United States is considering releasing intelligence on China's prospective arms transfer to Russia. Previously, China-Russia relations appeared to have exacerbated geopolitical tensions, as the United States strongly condemned such actions and favored a surge towards risk aversion, which favored the US Dollar.

 

In a separate section of the most recent Federal Open Market Committee (FOMC) Monetary Policy Meeting Minutes, all participants agreed that additional rate increases are necessary to achieve the inflation target, while also favoring further Fed balance sheet reductions. James Bullard, president of the Federal Reserve Bank of St. Louis, told Reuters that the Fed will need to raise interest rates above 5% to combat inflation. The policymaker also stated that he believes there is a good possibility they will be able to beat inflation this year without causing a recession. In addition, according to Reuters, John Williams, president of the Federal Reserve Bank of New York, emphasized the concerns supporting the Fed's higher interest rates by stating, "Fed is utterly committed to getting inflation back to 2%."

 

US Treasury bond yields are inactive after retreating from a multi-day high, while Wall Street closed neutral and the S&P 500 Futures are modestly bid as of late.

 

The second estimates of the US Personal Consumption Expenditures (PCE) data for the fourth quarter (Q4) and the preliminary readings of the US Q4 Gross Domestic Product (GDP) will be crucial for providing USD / CAD traders with new information in the near future.


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