Currency Challenges facing Canada
Currency Analysis:
- Rising equity prices lift global risk sentiment.
- Oil price drop may be acting as a drag on Canadian dollar gains.
- USD opens quietly after dull overnight session.
USDCAD: open 1.3710, overnight range 1.3689–1.3715, close 1.3701, WTI $81.98, Gold, $2295.66
The Canadian dollar rallied yesterday but ran out of gas and consolidated the move overnight. USDCAD dropped from 1.3754 to 1.3686 on Monday, then inched higher overnight partly because West Texas Intermediate (WTI) oil traded lower.
WTI is trading at the bottom of its 81.42–83.01range after Middle East tensions eased somewhat.
China and US trade tensions are bubbling to the surface again. This time the US may sanction some Chinese banks who have been supporting Russia’s war effort in Ukraine. If so, it has severe repercussions for Chinese trade in Europe as payments could be disrupted.
EURUSD drifted inside a 1.0638–1.0696 band. A modest improvement in German Composite PMI (actual 50.5, previous 48.3) and a similar result in the Eurozone Composite PMI provided some support.
GBPUSD traded poorly in a 1.2330–1.2389 and was unable to get any support from improving PMI data. That’s because UK and Interest rate spreads are very wide (in favour of the US). Analysts expect the BoE to cut rates by 150 bps more than the Fed.
USDJPY inched higher in a 154.66–154.87 range fueled by steady to firm US Treasury yields. The US 10-year Treasury yield traded around the 4.62% area, underscoring the JGB/US yield differential. Better than expected Japanese PMI data was not a factor. Japan’s Finance Minister Shunichi Suzuki hinted at joint intervention after meeting with his counterparts from the US and Korea. He said, “I won’t deny that these developments have laid the groundwork for Japan to take appropriate action, though I won’t say what that action could be.”
AUDUSD was directionless in a 0.6441–0.6465 range April PMI data was mostly ignored as traders await the inflation report due on Wednesday.
Source — https://www.baystreet.ca/articles/forex_trader.aspx
Why is a weak dollar important to Fiscal and Monetary Policies?
- Geopolitical risks and threats continue to impact commodity prices -https://www.fastmarkets.com/insights/key-topics/2024-commodity-market-outlooks/
- USA fiscal and monetary policies vs Canada fiscal and monetary policies — https://ca.investing.com/news/forex-news/bofa-sees-limited-upside-for-usdcad-amid-boc-rate-cut-outlook-93CH-3362740
- Impact on FDI — https://ca.finance.yahoo.com/news/ottawas-budget-makes-feel-canada-144202917.html
- Inability of Justin Trudeau and his Finance Minister Chrystia Freeland continue to moved forward with more spending and higher taxes. The budget 2024/2025 did little to address lack of innovation, low productivity, excessive regulations, tax fairness, and delivering program spending with value for money. Blog — Productivity and Business Investments — What is next for Canada — https://medium.com/@paulyoung_81567/canada-is-facing-uphill-battle-to-attract-foreign-direct-investment-fdi-8773d680cded
- Justin Trudeau continues to move forward with the green transition despite the many challenges including viability, cost effectiveness, and availability of technology — Blog — Green Transition — The role of Unions (Unifor) and the Green Transition — Federated Cooperatives — https://medium.com/@paulyoung_81567/oil-and-gas-green-transition-2074a48d9c8d and https://www.linkedin.com/posts/paul-young-055632b_oil-and-gas-green-transition-activity-7187667760410169344-Erzd?utm_source=share&utm_medium=member_desktop
I am all for fair labor practices. Capital is very fluid. It is important to have the right policy as part of supporting FDI. https://medium.com/@paulyoung_81567/canada-is-facing-uphill-battle-to-attract-foreign-direct-investment-fdi-8773d680cded
I also find it interesting how articles like this target the private sector in terms of their union negotiation but say little about the high cost of government including pensions, benefit, and wages. The federal government of Canada had a balance budget in 2015 when Justin Trudeau took office. Justin Trudeau 1st year in office there was $987M deficit. The $987M deficit then grew to approximately $13B by 2019. Currently, the federal government is on pace for a $30B deficit. I have raised concerns in the past that no government can tax and spend themselves to prosperity. Blog — Canada vs Australia — Fiscal and Economic Comparison — April 2024 — https://medium.com/@paulyoung_81567/canada-vs-australia-cc73290c5871
I have also written many articles on the transformation of the workforce. The old saying quality work demands quality people! The importance of DEI Programs as part of ESG reporting Metrics — Linkd in — https://www.linkedin.com/posts/paul-young-055632b_the-importance-of-dei-programs-as-part-of-activity-7184938000777195520-RPiW?utm_source=share&utm_medium=member_desktop or Medium — https://medium.com/@paulyoung_81567/the-importance-of-dei-programs-as-part-of-esg-reporting-metrics-be50951b19c7
Paul Young CPA CGA is a former Senior IBM Customer Success Manager that has deployed over 300 data and AI solutions across geographies for the past 8 years. Paul is also FPA SME on how best to integrate macro and micro indicators as part of the data journey for the operational, management, and regulatory reporting cycles.
Blog — How to select the best ESG solution for your /Organization — https://www.linkedin.com/pulse/how-select-right-environmental-social-governance-solution-paul-young-83mzc/
USA and Canada
Medium — Stock Market Analysis and Commentary — WE — April 19, 2024 — https://medium.com/@paulyoung_81567/stock-market-analysis-and-commentary-we-april-19-2024-b71da6fc2a98
ASX WE April 19, 2024
Medium — https://medium.com/@paulyoung_81567/stock-market-australia-we-april-19-2024-e2cb00ae6fdd
Blog — Stock Market — Australia for WE April 12 2024 — https://medium.com/@paulyoung_81567/stock-market-australia-for-the-w-e-april-12-2024-b7e2c0ef400d