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According to Politico: U.S. House Republican Don Bacon said he plans to introduce a companion bill to bipartisan Senate legislation aimed at restoring Congresss authority over tariffs, becoming the first House Republican to publicly challenge the power Trump has used to launch a massive global trade war.April 5th news, the next meeting of the Federal Reserve will be held on May 6-7. The futures market had raised the probability of the Federal Reserve cutting interest rates at that meeting to about 50%, but after Powells speech, the probability fell to about 30%. Market participants hope to see the so-called Fed Put (Fed Put option), that is, the Federal Reserve calms the troubled market by cutting interest rates, but on Friday, their expectations fell through, causing the stock market to fall. "Powells remarks highlight that we are still a long way from the macro environment and market data that may produce a Fed Put," wrote Krishna Guha, chairman of Evercore ISI. "He is seeking to control expectations to reserve room for rate cuts when unemployment rises sharply. Before that, preemptive action is impossible given the scale of the tariff inflation surge." For Powell, there is no rush now. Guha said: "It feels like we dont need to rush, it feels like we still have time."JPMorgan Chase: Predicts a US economic recession in 2025.On April 5, Federal Reserve Chairman Powell made it clear that the Fed will not rush to respond to the comprehensive tariffs imposed by the Trump administration, nor will it respond to the financial market turmoil caused by concerns about a global recession. Powell said at a conference in Virginia on Friday that tariffs could have a significant impact on the US economy, including slower growth and higher inflation. But he added that Fed officials will wait until these policies are clearer before cutting interest rates. He also emphasized that with inflation still high, the central bank has an obligation to ensure that the temporary increase in prices caused by tariffs does not turn into a more lasting increase. "The Fed cant insure the economy as it did in the trade war in 2018 and 2019 because inflation is too high and above their target," said Julia Coronado, founder of research firm MacroPolicy Perspectives. She believes there will be a recession in the second half of this year. "Even if they conclude that they need to cut interest rates, they may cut interest rates later and slower because we will be in the inflationary impulse."Russian drones carried out a "large-scale" attack on Krivoy Rog, Ukraine, following a missile strike, local Ukrainian officials said, starting fires at four locations.

As the Fed confirms the disinflationary process, the USD/CAD exchange rate may fall to 1.3250

Alina Haynes

Feb 02, 2023 16:05

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The USD/CAD pair resumed its two-day losing run after slipping below 1.3270 in Asia. Following two days of declining US inflation, the Canadian dollar fell on Wednesday.

 

The US Manufacturing PMI (Jan) dropped for a third consecutive month to 47.4, below the consensus estimate of 48.0 and the prior reading of 48.4. The Index of New Orders for Manufactured Goods, which indicates future demand, decreased to 42.5 from 46.1 and 45.1. Fed Chairman Jerome Powell stated in his comments that consumer spending has slowed significantly and that the central bank will now focus on labor cost balance. The US Employment Cost Index (Q4) fell by 1%.

 

The US Consumer Price Index (CPI) and Producer Price Index (PPI) have decreased for three consecutive months, while economic activity and consumer spending have slowed, signaling deflation. Powell stated, "Can now for the first time announce, 'The disinflationary process has begun.'"

 

The market participants' risk appetite has raised the demand for risky assets. After a solid performance on Wednesday, S&P500 futures increased in the Asian morning. The US Dollar Index (DXY) found limits following a decline to about 100.80 amid risk-on market mood. The yield on 10-year US Treasuries has surpassed 3.41 percent.

 

Monthly GDP (Nov) data for the Canadian dollar were 0.1%, above the consensus forecast of flat. Since the Bank of Canada (BoC) ceased policy tightening after increasing interest rates to 4.50 percent, the Canadian economy has not declined on a monthly basis.

 

After plunging to nearly $76, the price of oil is recovering. Black gold dipped on Wednesday after the US Energy Information Administration (EIA) reported 4.14 million oil inventories for the week ending January 27. Because Canada is a major oil exporter to the United States, lower oil prices influence the Canadian Dollar.


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