Powell’s Future in Question as USD Sinks

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

US Dollar        1.3550-1.3780

Euro                 1.5860-1.6110

Sterling            1.8610-1.8850

WTI Oil (opening level) $65.18

The CAD/USD is opening at 1.3710 ( 0.7294 ) 

Headlines

·    Trump could speed up naming Jerome Powell's successor as Fed Chair due to frustration with slow interest rate cuts, the Wall Street Journal reported Wednesday. Candidates would be those who have argued the Fed policy rate should be lower, leading to a downward shift in rate expectations.

·    The Federal Reserve has proposed lowering capital requirements under the enhanced supplementary leverage ratio, allowing large banks to hold more U.S. Treasuries and better support the $29 trillion market. While aimed at improving Treasury market stability, critics like Governor Michael Barr warn it could weaken safeguards and heighten the risk of bank failures.

·    US Fed Chair Powell said stagflation isn't the current scenario for the Fed. He noted a potential inflation shock requires careful handling, as inflation exceeds the 2% target. Powell stressed cautious policy to avoid long-term economic costs, without committing to a firm inflation outlook.

·    US new single-family home sales fell by 13.7% in May 2025 to 623,000 units, reversing April's 9.6% rise. This was below the expected 700,000 units, the sharpest drop since June 2022, as higher mortgage rates and economic uncertainty led households to delay buying.. 

Key Points

·    Equities: Nvidia drives Nasdaq higher; Europe cautious; defense stocks up on NATO spending

·    Volatility: VIX falls to new lows; short-term calm, longer-term risks linger

·    Digital assets: BTC steady above $107k; IBIT inflows; ETHA softens after rally; institutional focus

·    Fixed Income: US short treasury yields fall again on speculation of early Fed Chair nomination to replace Powell

·    Currencies: USD weakens to new three-year lows

·    Commodities: Platinum hits 11-year high. Key crops tumble amid perfect growing conditions