Sunset Market Commentary

The bigger inflation picture was thus by and large in line with forecasts. However, the market reaction was again quite large.

Bank of Canada Maintains Pause, Cautions on Cyclical Strength  

The BoC held the line in today's announcement. While it acknowledged that the economy is exhibiting cyclical strength as evidenced by strong employment gains and a bounce-back in consumer spending, it appears confident that growth is set to slow in the coming months. This slowdown, though delayed, has kept the faith that inflation will continue to decelerate, hitting 3% year-on-year this summer.

Fed Minutes Showed Recent Banking Turmoil May Result in Lower Terminal Rate

The minutes from the March 21-22, 2023 Federal Open Market Committee (FOMC) meeting reiterated that price and financial stability are of paramount importance to the Fed.

Australia March Labour Force: A Sound Update Reflecting the Strength of Labour Supply

Australia Total employment: +53.0k from +63.6k (revised from +64.6k); unemployment rate: 3.5% from 3.5% (unrevised 3.5%); participation rate: 66.7% from 66.7% (revised from 66.6%). The labour market continues to weather the headwinds facing the broader economy, remaining in robust health.

Given the Uncertain Outlook, There's a Need for "Flexibility and Optionality".

Given the uncertain outlook, there’s a need for “flexibility and optionality”. The sky in the meantime cleared up a bit, something which several Fed governors including Daly yesterday, acknowledged.

Cryptocurrency Market About to Hold These Levels

Bitcoin is consolidating around the $30K mark for the third day, moving in a tight $20.7-30.3K range. Yesterday’s news from the US had a moderately negative impact on the price but did not cause any sustained pressure.

AUD/USD – Australian Dollar Jumps on Sizzling Jobs Report

Australia posted a blowout employment report today, giving the Australian dollar a strong boost. The economy created 53,000 new jobs in March, after a downwardly revised 63,600 a month earlier. This crushed the estimate of 20,000 and especially impressed as full-time employment increased by 72,000 (part-time decreased by 19,200). Unemployment was unchanged at 3.5%, below the forecast of 3.6%.

USDCAD Approaching Important Support Level

On the USDCAD chart, we can observe a narrowing triangle (1-2), indicating the balance of supply and demand. The breakdown of the (3) triangle in March turned out to be false. By its behaviour, the market suggests that the true exit from the triangle will take place in a bearish direction. And this could be the beginning of a long-term downtrend.

Sunset Market Commentary

We still have tomorrow’s US retail sales and consumer confidence due, but if the break is confirmed at the end of the week, we’re looking at EUR/USD 1.1185 as the next meaningful resistance area. The mirror image for the trade-weighted DXY (100.92) consists of losing 100.82 support (current YtD low) before returning to the 99.4 area.

GBP/USD – Pound Climbs to Highest Level Since June 2022

GBP/USD has edged higher and is trading around the 1.25 line. Earlier today, GBP/USD touched a high of 1.2537, its highest level since June 6th.