Overnight, the Dollar edged mildly higher, but quickly turned to mixed fortunes. The USD is somewhat supported by comments from Federal Reserve officials. St. Louis Federal Reserve President, James Bullard, reiterated opinions of other officials and said the Federal Reserve could start winding down its $4.5T balance sheet later this year. In contrast, New York Federal Reserve President, William Dudley, spoke on Friday and said that shrinking the balance sheet would only prompt a "little pause" in tightening. Weaker employment growth in the US reported on Friday did not affect risk appetite significantly and equity markets emerged relatively unscathed, as did the Dollar. The Dollar also seems to have strengthened as President Trump’s threats of tariffs on Chinese goods have been scaled down since the election campaign and the two day summit between the US President and Chinese leader Xi Jinping were conducted in a constructive manner. Both stated that a quick trade agreement needs to be in place and China were also open to renewed access to the financial sector and abolished tariffs on certain US goods.
Today, Federal Reserve Chair, Janet Yellen, will speak, so markets await hints of her view on rates and balance sheet. It is likely that US President Donald Trump's implementation of his election promises of fiscal stimulus could be another factor, and more than likely a main focus.
The Bank of Canada (BoC) rate decision will be the highlight of the week. The Bank of Canada is widely expected to keep their interest rate unchanged at 0.50%. The tone of the statement could remain slightly dovish, in spite of improvements in economic data. Nonetheless, the Canadian Dollar will likely follow more on oil prices as West Texas Intermediate (WTI) crude oil could be heading back to 55.24 resistances due to geopolitical tensions.
In addition to that, we have a busy week on the data front, with UK Inflation and Employment data, German ZEW, the China Consumer Price Index (CPI), Producer Price Index (PPI) and Trade Balance, Australian Employment figures, the US Consumer Price Index (CPI) and Retail Sales data, all of which will be closely watched in a holiday shortened week, ahead of the long Easter weekend.
Why did the farmer bury all his money?
To make his soil rich!
What did the summer say to the spring?
Help! I'm going to fall.
What kind of garden does a baker have?
A "flour" garden.