With the US earnings season underway amid a relative calm in US Treasury markets, benchmark US stock indexes such as the Dow, S&P 500, and the Nasdaq 100 look set to post new record highs this week, even though the futures contracts are dipping slightly at the time of writing.
As for the currency markets, amid a softening US dollar, it remains to be seen whether the likes of the euro and the Canadian dollar can take advantage of the potential catalysts in the coming days:
Monday, April 19
- Canada unveils federal budget
Tuesday, April 20
- Johnson & Johnson earnings (before US markets open)
- Netflix earnings (after US markets close)
- Apple unveils new products
Wednesday, April 21
- Bank of Canada rate decision
- Canada CPI (inflation)
Thursday, April 22
- ECB rate decision
- ECB consumer confidence
- Intel earnings
- American Airlines earnings
Friday, April 23
- Eurozone, UK, US Markit manufacturing PMI
- US new home sales
Watch Apple’s share price
At its event labelled “Spring Loaded”, the iPhone maker is expected to announce new products, including a line of new iPad Pros. The iPad contributed over 8% to Apple’s total annual revenue in three out of the past four years. Still, last year’s figures were the highest for iPad sales since 2014, as consumers flocked to the tablet as work and schooling commitments became home bound amid the lockdowns worldwide.
It remains to be seen whether the confirmed features of this new iPad Pro would also excite market participants, considering that Apple’s share prices have failed to match its January record high. The stock is still some 6.3% lower since recording its highest ever closing price on January 26th.
During the same period (since 26 January):
- Facebook has surged 8.56% to post a new record high on April 7
- Alphabet shares have climbed almost 20% to hit a new record high on April 16
- The Nasdaq 100 has climbed 4.09% to post a new record high on April 16
“Perhaps the iPad Pro could stir up enough enthusiasm this week for Apple’s stock to allow it to catch up with other tech stocks.”
CAD to still outperform G10 peers?
The Canadian dollar is the second best-performing G10 currency against the US dollar so far this year, and has also strengthened against all G10 currencies except for the Norwegian Krone. However, the CAD has fallen against most of its G10 peers on a month-to-date basis.
Still, Canadian dollar bulls can take heart from the fact that USDCAD’s 50-day simple moving average has resisted any major upward move for this currency pair to keep its downward trend intact.
“From a fundamental perspective, the Canadian dollar’s strength has been fuelled by the robust recovery in Canada’s economy.”
Today, Prime Minister Justin Trudeau is set to release the government’s first budget in two years. This increased spending of tens of billions could help recover the last 296,000 of the 3 million jobs it lost to the pandemic.
With the economy apparently on firmer footing, the Bank of Canada could announce the paring back of its bond purchases this week, and may even comment about a potential rate hike sooner than 2023.
“Should that happen, that could drive Canada’s government bond yields even higher, which may then serve as a tailwind for the CAD.”
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