Markets Remain Volatile Following Rate Hikes and Inflation Data
14 April 2022
Thursday's session has seen some careful optimism so far, but that can quickly change throughout the day.
US stock markets corrected some of this week's losses, pushing the Nasdaq 100 index 2% higher yesterday. But still, the medium-term trend seems negative amid rising yields globally.
Elsewhere, the German government rejected the EU ban on Russian oil for now. At the same time, Moscow declared that US and NATO vehicles delivering weapons on Ukrainian soil would be considered legitimate military targets.
On Wednesday, the Bank of Canada increased benchmark interest rates by 50 bps to 1.00%. Also, it announced plans to begin reducing the size of its balance sheet, starting April 25, given that it sees an increasing risk that expectations of elevated inflation could become entrenched. As a result, the USDCAD pair dropped 100 pips, sending the pair back toward the 1.25 support.
Later today, the ECB will deliver its monetary policy decision. However, nothing new is expected from the central bank as it remains the single CB among the major CBs to keep saying that inflation is transitory and not tightening monetary policy.
Additionally, the usual Thursday's US jobless claims will be released, along with retail sales for March, expected to improve notably month on month.