CAD Gains as Inflation Fuels Hopes for a Neutral BoC Stance

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

US Dollar        1.4140-1.4360

Euro                 1.5260-1.5480

Sterling            1.8300-1.8510

WTI Oil (opening level) $69.71

The CAD/USD is opening at 1.4250 ( 0.7017 )

The CAD rises as investors hope that the Bank of Canada could adopt a neutral monetary policy stance after remaining significantly dovish since June 2024. These expectations have stemmed from February’s Consumer Price Index report, which showed that inflation accelerated at a faster-than-expected pace. There is also talk about Canada that the tariffs on Canada will be less than the rest of the world.

Headlines

·    U.S. sales of new single-family homes rose 1.8% to an annual rate of 676,000 in February 2025, recovering from a 6.9% drop in January but slightly below the expected 680,000. Warmer weather and easing mortgage rates attracted some buyers, but sales may remain pressured by economic uncertainty.

·    Consumer confidence fell for the fourth month in March, dropping to 92.9 vs 94 est, the lowest in 4 years. Expectations for future business conditions and employment prospects hit a 12-year low, and optimism about future income vanished. Inflation expectations rose from 5.8% in February to 6.2% in March, amid concerns about high staple prices and tariffs.

·    UK retail sales gauge fell by 18 points to -41.0 in March 2025, the lowest since April 2024 and below the expected -28.0. This marks the sixth consecutive monthly decline, with global trade tensions and the Autumn Budget cited as factors reducing consumer and business confidence, leading to weaker demand.

·    The US and Russia have agreed to ensure safe navigation and prevent military use of commercial vessels in the Black Sea, as per a White House statement. They will also develop measures to ban strikes on energy facilities in Russia and Ukraine. The US will support ongoing negotiations for a peaceful resolution.

Key Points

·    Equities: US cautious gains, EU boosted by tariffs, Asia mixed recovery

·    Volatility: VIX declining, futures muted, cautious sentiment

·    Digital Assets: Bitcoin steady, GameStop BTC investment, altcoins selective

·    Currencies: USDJPY moves linked to the yield differential

·    Fixed Income: US Treasuries pair losses on soft economic data

·    Commodities: HG copper hits fresh record as tariff decision looms