American FX Outlook: Canadian inflation headlines

What you need to know before markets open

  • The US Treasury market eased a bit on Friday during the European session after the benchmark 10-year Treasury yield rose to 3.13% overnight, its highest level since 2011.
  • Major currency pairs are kept in tight ranges on Friday as the rout on the US Treasuries eased a bit.
  • Italian populist government has been sealed on Friday weighing on Italian bonds.
  • Canada’s data set on both retail sales and inflation headline the day on the macro front while markets are likely to track closely the development of the US-China trade talks as well. 

Friday's upcoming market moving events

  • Canada’s retail sales are set to rise 0.4% m/m in April with core retail sales rising 0.5% m/m.
  • Canada’s core inflation is expected to rise 0.2% m/m while increasing 1.4% y/y in April. For detail of how to trade the USD/CAD click here.
  • Dallas Federal Reserve Bank President Robert Kaplan is due to participate in a moderated discussion at the 12th Annual University of Texas at Dallas Project Management Symposium in Richardson, Texas at 13:15 GMT
  • Federal Reserve Board Governor Lael Brainard is scheduled to speak on Community Reinvestment Act Modernization at the "Association for Neighborhood and Housing Development's 8th Annual Community Development Conference" in New York at 13:15 GMT.

Major market themes

  • The US benchmark Treasury yields jumped to 3.13% supporting the US Dollar to rise to the highest level in last 5 months, but yields retreated in Europe to 3.10%.
  • The market is likely to closely watch the US-China trade talks.
  • Watch CAD reacting to the inflation and retail sales data. For detail of how to trade the USD/CAD click here.

Earlier in Asia/Europe

  • German factory gate inflation is expected rose 0.5% m/m in April while accelerating to 2.0% y/y.
  • German wholesale prices rose 0.4% m/m while rising 1.4% y/y in April.
  • Cleveland Federal Reserve Bank President Loretta Mester spoke about macroprudential tools and monetary policy at the Third Annual European Central Bank Macroprudential Policy and Research Conference in Frankfurt.
  • The Eurozone current account surplus rose well above expectation to €32.0 billion in March.

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