Dollar beats yenBy Peter Rosenstreich
Pro inflation policy and US economic acceleration suggest further upside for USD/JPY. The greenback continued to improve against the yen, as US yields rose across the curve. With the macro backdrop of US-China trade optimism and an improved outlook for the US economy, 10-year Treasuries hit 3.128%, a 7-year high. Federal Fund Futures continue to price only two 0.25% rate hikes in 2018. On widening spreads (specifically in short-durations) USD/JPY reached a session high of 110.992. Meanwhile, Japan’s consumer price index fell to a disappointing 0.6% annually in April, and core inflation dipped to 0.4% from 0.5%. These are way off the Bank of Japan’s 2% inflation target, so the bank will not soften its reflation stance.
CAD canBy Vincent-Frédéric Mivelaz
The performance of USD/CAD was subdued in April 2018, due to a strong USD rally, but against other currencies the loonie is on the rise. For CHF/CAD, CAD/JPY and EUR/CAD, the CAD gained 5.12%, 5.08% and 4.78% respectively. The impression of a non-commodity impact is misleading. Key upcoming data releases in Canada are April consumer prices and retail sales. Inflation readings are expected to remain stable at +0.30% monthly and +2.30% annually along with a slight increase of 0.50% in core retail sales (prior: 0%). A USD/CAD pullback in the short-term is likely, influenced by positive Canadian data and weakening USD momentum. Currently given at 1.2809, USD/CAD is trading sideways, expected to head to 1.2850 in the short-term.