The US dollar moved mostly lower on the day.
The BOC Rates kept rates unchanged and Adam pointed out that
The BOC Governor Macklem had a rough time of it in his presser. The central banker offered little in the way of clear policy guidance or a coherent framework for addressing the ongoing trade war. Instead of providing direction, Macklem relied on vague, repetitive talking points—repeating the phrase “navigating carefully” multiple times while referencing his notes. At one point, he stated the Bank was prepared to “act decisively,” only to backtrack and redefine the term as simply meaning flexibility.That his remarks were more like wishful thinking, particularly in the face of unpredictable U.S. trade policy under Trump. Rather than engaging meaningfully in the debate about whether tariffs are a transitory shock or a longer-term drag on growth and inflation, Macklem largely avoided the topic. He and Deputy Governor Rogers even downplayed the Bank’s own newly-released Monetary Policy Report (MPR) forecasts.Finally, in a rare moment of candor came when Macklem acknowledged the “erratic, unpredictable course of U.S. trade policy,” a sentiment many market participants likely share. While he reiterated the Bank’s commitment to price stability and supporting the economy within its mandate, that message was buried in a delivery that felt uncertain and meandering. Had he leaned more heavily on that assurance, the press conference may have landed more effectively.Powell emphasized that the evolving nature of administrative policies introduces significant uncertainty. He warned that if both inflation and employment goals move off track, the Fed will need to assess how far the economy deviates from its dual mandate and how long those gaps may persist. He sees a strong possibility that trade-related disruptions could push the Fed away from achieving its goals for the remainder of the year. If inflation expectations rise due to delayed tariff effects, the Fed’s challenge would intensify. He remarked that the U.S. hasn’t faced tariffs at this level since the Smoot-Hawley era (and it did not end well either), making it difficult to model the economic impact. Despite these challenges, Powell said markets remain orderly, and the Fed stands ready to provide dollar liquidity to global central banks if necessary. He also downplayed concerns about U.S. government debt, noting that domestic discretionary spending is a small part of the equation.
Although Powell's comments did not help US stocks, they did get off on the wrong foot after Nvidia announced it would take a $5.5 billion charge due to new U.S. export restrictions requiring a license for shipping its H20 AI processors to China and other countries. AMD and Intel also had restrictions as the Trump administration puts the squeeze on China at the expense of Nvidia, AMD, Intel and other chip manufacturers.
Yields in the US are closing near the lows after being higher earlier. A snsapshot of the closing levels shows:
2 year yield 3.775%, -5.12 basis points5-year yield 3.908%, -1.4 basis points10 year yield 4.280%, -4.2 basis points30 year yield 4.742%, -3.4 basis pointsIn other markets,
Crude oil is trading up $1.30 or up 2.12%Gold surged by $113 or 3.5% to $3342.48. That is the largest one-day gain going back to at least 2013, and maybe on record given it is trading at all-time highs.Bitcoin is trading up $657 and $84,343 This article was written by Greg Michalowski at www.forexlive.com. Read More Details
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