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Price indices show growth in the Canadian economy
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Daily Currency Update
A multitude of Canadian data showed markets a hopeful growth in the Canadian economy. The Industrial Product Price Index (IPPI) came in at 0.8%, the same as expectations and below the previous 1.1%. The New Housing Price Index (NHPI) was at 0%5, slightly worse than the expected and previous 0.1% levels. The Raw Materials Price Index (RMPI) showed a better-than-expected level at 4.7%, versus the expected 2.9% and previous 2.1%. The Bank of Canada (BoC) and the Federal Reserve are expected to diverge on next steps as inflation in Canada has turned to the downside and economic growth has picked up. As a result, the CAD is expected to weaken against USD according to Goldman Sachs’ strategists. In oil news, West Texas Intermediate (WTI) crude oil was down 0.33% to 81.80 this morning.Key Movers
The US Dollar Index (DXY) was up 0.1% this morning to trade near 106.219. The USD continued to inch higher this morning against the EUR and JPY after last week’s volatility as the Federal Reserve signaled a hold on rate cuts for the time being. The Chicago Fed National Activity Index, a monthly index designed to gauge overall economic activity and related inflationary pressures, came in at 0.15 in March, better than the forecasted and prior 0.09 levels.In the Eurozone, the Eurostat consumer confidence for April came in below expectations at -15, versus the expected -14. This held steady from March’s level. The European Central Bank is expected to cut rates in June and two more additional times this year, which is less than markets previously thought. This was largely due to the steeper fall in inflation in the Eurozone than in the US.
The Bank of Japan (BoJ) is expected to project inflation will remain consistent around the 2% target on Friday following a 2-day meeting. This will likely signal a chance for a rate hike from the current near-zero level.
Expected Ranges
- EUR/CAD: 1.45856 – 1.46533 ▼
- GBP/CAD: 1.68871 – 1.70105 ▼
- AUD/CAD: 0.88049 – 0.88543 ▲
- USD/CAD: 1.37149 – 1.37526 ▼
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