Yesterday, the market outlook improved as talks between Russia and Ukraine have been somewhat constructive, said the Russian negotiator Medisnky. Furthermore, reports emerged that a Putin – Zelenskiy meeting could be possible soon. Also, the Ukraine negotiator noted that Ukraine’s neutral status would mean that there would not be any foreign military bases in the country.
In the US, Philadelphia Fed President Patrick Harker crossed the wires. Harker stated that inflation in the US would be around 4% in 2022 and added that the US central bank “misjudged” the effect of fiscal expenditure on inflation. He added to the list of policymakers that do not rule out a 50-bps increase to the Federal Funds Rate. Harker commented that the QT could add the equivalent of two quarter-point rate increases to Fed tightening.
The futures market anticipates six more rate hikes by the Federal Reserve in 2022. In fact, some market players expect two 50 bps increases in the May and June meetings. For now, regarding the Bank of Canada, markets are pricing in “between 200 and 225 basis points in the six remaining interest rate announcements in 2022, up from about 140 basis points before a blockbuster employment report this month,” according to Reuters.
Looking forward, we are bearish on the USDCAD pair waiting for the NFP figure this Friday which could change its traction.
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