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CPI data from Canada in the shadow of the boom in commodities and cryptocurrencies
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CPI data from Canada in the shadow of the boom in commodities and cryptocurrencies

created Forex Club21 May 2024

Tuesday's session on the stock exchanges, just like yesterday, will not feature macro publications that are crucial from the point of view of the broad market. The exception here may be the CPI report from Canada, which will most likely only influence the change in the valuation of the Canadian dollar on the currency market. Investors, however, are impatient they are waiting for Nvidia's quarterly report tomorrow, the stock market king of AI technology. Moreover, the huge increases observed in the commodity and cryptocurrency markets are creating quite a stir.

Another pigeon surprise?

Readings from the beginning of 2024 CPI inflation in Canada, they surprised downwards or fell in line with expectations, so the chance for another dovish surprise increases. This time, analysts estimate that the growth rate of prices of goods and services in April continued to decline and amounted to 2,7% y/y compared to the last reading of 2,9%. Such data would generally reflect the BoC's restrictive monetary policy stance and theoretically, they would open a window for the first interest rate cut by 25 basis points in July. The key to the materialization of this scenario may be the data-confirmed slowdown in the growth of prices of discretionary goods/services and interest rate-sensitive inflation categories.

However, it seems that the report from Canada will not trigger volatility on the broader market. However, it may be the euphoric mood on the commodity and cryptocurrency markets. Gold rose to new all-time highs, reaching levels close to USD 2450 per ounce. Silver, although still far from records, is at its highest levels since 2013, at USD 32 per ounce. However, this is not all, because the attempt to take over Anglo American, and above all, copper-related assets, by BHP is driving the growth of industrial metals, which additionally benefit from the revival of economic momentum in the Middle Kingdom.

The chances for an Ethereum-based ETF are increasing

Ethereum remains in the spotlight on the crypto market. Senior ETF analysts at Bloomberg sent markets into a frenzy yesterday after updating their forecasts for the percentage chance of approval of ETFs based on Ethereum from 25% to 75%. This information managed to increase the price of ETH by over 18% last evening. Good data regarding this cryptocurrency and the fact that last week recorded a two-month peak in net inflows into Bitcoin ETF funds also managed to push the largest cryptocurrency above the USD 70 barrier.

The best performers on the FX market are the British pound and the euro. However, we observe large declines in the Antipodean currencies. The Polish zloty is recording mixed levels this morning. We will currently pay PLN 3.9150 for a dollar, PLN 4.2539 for a euro, PLN 4.3025 for a franc, and PLN 4.9795 for a pound.

Source: XTB Analysis Department

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About the Author
Forex Club
Forex Club is one of the largest and oldest Polish investment portals - forex and trading tools. It is an original project launched in 2008 and a recognizable brand focused on the currency market.