UAE Exit from OPEC Signals Shift in Global Oil Supply Dynamics

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

US Dollar        1.3560-1.3810

Euro                1.5940-1.6190

Sterling           1.8360-1.8610

WTI Oil (opening level) $103.32

The CAD/USD is opening at 1.3680 ( 0.7310 )

USD/CAD has stalled below 1.3700, after bouncing from lows around1.3600 earlier this week, as investors bid their time ahead of the outcomes of the Bank of Canada (BoC) and the US Federal Reserve (Fed) monetary policy meetings due later in the day.

The BoC is widely expected to leave its benchmark rate unchanged at the current 2.25%, despite higher inflationary pressures stemming from the war in the Middle East. BoC Governor Tiff Macklem affirmed earlier this month that he expects inflationary pressures to spike in the near-term, to return towards the bank’s 2% rate by the end of the year.

A few hours later, the Fed will release the decision of its last meeting with Jerome Powell at the front. The bank is also expected to leave interest rates on hold this time, and probably also during the whole 2026. The monetary policy committee, however, remains deeply divided, and the presumed next Fed Chair, Kevin Warsh, will have to cope with pressures from Trump to ease monetary policy.

Apart from that, Powell will have to decide whether to continue as Governor, as his term at the board extends until 2028, or leave the bank, as Trump demands. Fed chairs normally leave the bank once their four-year term expires. In this case, however, it might be different as Powell has suggested that he would remain at the bank if he sees its independence under threat.

Headlines

• Australia’s March headline CPI came in at +1.1% MoM and 4.6% YoY vs. 4.8% YoY expected and 3.7% YoY in Feb. The core, “trimmed mean” readings for March were +0.3% MoM and the as expected 3.3% YoY. For the Q1 CPI readings, only the QoQ core trimmed mean reading surprised slightly, with a +0.8% reading versus 0.9% expected, while the YoY number was inline with expectations at 3.5%
• US private payrolls rose an average of 39,250 per week in the four-week period ending April 11, according to ADP Research and the Stanford Digital Economy Lab.
• US same-store sales rose 7.7% year-over-year in the week ended April 25, according to Johnson Redbook, with sales benefiting from an extra selling day this year compared to last year due to the timing of Easter.
• The UAE has decided to leave OPEC, effective 1 May, as it seeks release from the constraints imposed by OPEC quotas to gradually increase production in a post-war environment where supply tightness will be a focus for a prolonged period amid the global rebuild of commercial and strategic reserves. The departure of the UAE, one of OPEC's most influential members, will raise wider questions about the group's credibility and market power, given its future ability to managed prices by adjusting supply.
• Trump has instructed aides to prepare for an extended blockade of Iran, targeting the regime's coffers in a high-risk bid to compel Iran to end its nuclear program, a move Tehran has long refused.

Key Points

• Equities: US and Europe slipped on AI worries; Asia was mixed as Korea’s chip rally met China and Japan weakness.
• Volatility: VIX ~18; event-heavy; Fed + mega-cap earnings; upside skew
• Digital Assets: BTC stable; ETH firmer; IBIT softer; ETHA steady
• Currencies: USD firm in slow trading as US short yields rise slightly ahead of FOMC meeting
• Commodities: Crude near war-cycle high as strait stays shut; gold steadies, wheat hits two-year high
• Fixed Income: US short-dated yields rise slightly ahead of FOMC meeting with no strong policy guidance expected