NY Open: Inflation surge boosts CAD
A surprisingly strong Canadian inflation print has placed USDCAD on its back foot in the early New York session. Could this clear a path towards a September rate hike from the Bank of Canada?
Wednesday's Federal Open Market Committee outing saw the US central bank make several notable changes to its language whose overall bias was to the hawkish side. Growth, for instance, was cited as 'solid' rather than 'moderate' and the overall sense from the Fed was that the US economic recovery is on track.
While the meeting's impact on equities, forex, and commodities was limited, Saxo Bank head of Equity Strategy Peter Garnry says that things could prove very different for emerging markets if the Fed holds to its hawkish policy outlook, including two more rate hikes this year.
"The trajectory here is painful for emerging markets," says Garnry, who also cautions that equities could take a post-Fed hit from President Trump's planned tariff announcement into this weekend.
Up today is the European Central Bank, and the big question here is whether it will offer guidance on its QE tapering plans or whether it will wait until its July meeting to make the announcement with six more weeks of data under its belt.
"The expectation here is that QE will last until year-end," says Garnry.
Saxo Bank Head of Commodity Strategy Ole Hansen reports that silver is one asset to watch into the ECB session as it is challenging resistance above $17/oz. Gold, meanwhile, remains "glued to $1,300/oz" with inflation expectations and trade fears providing support.
"$1,308/oz remains the upside level to watch in gold," says Hansen.