Trump Signs $1.2 Trillion Economic Deal with Qatar’s Emir, Including Record Boeing Order

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

US Dollar        1.3870-1.4100

Euro                 1.5520-1.5760

Sterling            1.8430-1.8670

WTI Oil (opening level) $61.09

The CAD/USD is opening at 1.3983 ( 0.7151 )

The USD/CAD rate traded around 1.3980 overnight recovering earlier losses as the CAD came under pressure due to declining crude oil prices. Given Canada’s status as the largest Oil exporter to the United States, falling Oil prices often dampen CAD sentiment.

West Texas Intermediate (WTI) Oil price extended its recent decline, dropping around 3% on Thursday after losing over 1% in the prior session. 

Headlines

·    News reports say that US authorities are set to announce a cut to the largest US banks' capital requirements, the supplementary leverage ratio. Such a move would allow the banks to leverage their balance sheets more, and many would see this initiative as aimed at the US treasury market to temper any further rise in yields, as banks could hold more US treasuries. Details are few, and one option might also be instead to simply exclude US Treasuries entirely from the bank leverage calculation.

·    There is speculation that US officials met with Korean counterparts to discuss weakening the dollar, aligning with earlier rallies by the Taiwan and Hong Kong dollars. Reports suggest the US is pushing for a weaker dollar against Asian currencies in trade deals with major Pacific exporters.

·    Trump signed agreements with Qatar’s Emir yesterday that “will generate an economic exchange worth at least USD 1.2 trillion”. This included the largest ever order for Boeing aircraft, some USD 96 billion. Also as Trump is in tour in the Middle East, Saudi Aramco announced USD 90 billion in agreements with US firms.

·    Australian employment jumped by 89,000 in April, the biggest increase in 14 months, while the jobless held steady as more people sought work, highlighting the resilience of the labor market at a time where the RBA is expected to cut rates further.

Key Points

Equities: Mixed US session; tech outperforms; European luxury stocks decline; UK corporate setbacks; Asian caution

Volatility: Slightly higher; caution ahead of economic data; VVIX elevated; futures indicate continued caution

Digital assets: Bitcoin and Ethereum down slightly; institutional dominance continues; retail activity subdued

Fixed Income: US yields rise, with long yields closing at new multi-month highs

Currencies: Japanese yen firms as currency could be on US-Japan trade talk radar and despite rise in US yields

Commodities: Gold slumps as haven demand dries up