Canada Awaits April 28 Election: Market Braces for Impact

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.4250-1.4490

Euro                 1.5440-1.5650

Sterling            1.8440-1.8660

WTI Oil (opening level) $67.76

The CAD/USD is opening at 1.4336 ( 0.6955 )

Are we election bound? I heard April 28. So for the next 6 weeks look for a narrow trading range here in Canada. 1.42 to 1.44. The trump tariffs will probably come up a few times during the next month or so as a talking point. So that will create some noise. But the world keeps spinning around and life will go on and the last 9-10 years of Liberal policies will be hard to ignore for causing the problems for CAD that we are currently in.

Headlines

·    Japan's inflation rate fell to 3.7% in February 2025 from 4.0% in January. Core inflation decreased to 3.0%, above the forecast of 2.9%, decelerating from a 3.2% print in January, staying above the BOJ’s 2% target for a 35th month, supporting the case to stay on a gradual rate hike path.

·    BoE voted 8-1 to keep the Bank Rate at 4.5% in March, citing persistent inflation and global uncertainties. The bank stressed a gradual approach to easing monetary policy.

·    ECB President Lagarde warned that EU retaliation against US tariffs could weaken growth but downplayed inflation risks. A 25% US tariff might reduce euro area growth by 0.3 pp, with counter-tariffs worsening it to 0.5 pp. The initial impact would be strongest, with inflation pressures fading, suggesting no rate hikes.

·    SNB reduced its key policy rate to 0.25%, the lowest since September 2022. Although expected, the bank did not commit to a specific policy path, stating that lower borrowing costs are suitable to align with low inflationary pressure.

·    Trump has signed an executive order to boost the US's ability to produce critical minerals, potentially including coal, to reduce import-reliance on at least 15 critical minerals of which 70% are imported from China.

Key Points

·    Equities: US stocks cautious; European stocks sharply lower; tariff concerns dominate sentiment

·    Volatility: Calm ahead of triple witching; 0DTE options volume at record highs

·    Digital Assets: Bitcoin flat; altcoins retreat; muted reaction to Trump’s crypto speech

·    Currencies: USD is heading for a small weekly gain

·    Fixed Income: Treasury yields trade softer following dovish Fed

·    Commodities: Silver drags gold lower, crude rises on sanction risks