RBI Holds Repo Rate at 5.25% as Inflation Risks and Global Uncertainty Persist 
Wall Street Analysts Weigh in on Latest NFP Data 
China's Refining Industry Faces Major Shakeup Amid Challenges 
U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge 
Eurozone Bond Yields Fall as Oil Slump Eases Inflation Fears Ahead of Central Bank Meetings 
Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure 
Bank of America Posts Strong Q4 2024 Results, Shares Rise 
BOJ Seen Holding Rates at 1% While Keeping Inflation Risk Warning 
Japan Economy Minister Downplays Inflation Risks Despite BOJ Warning 
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data 
Fed Holds Interest Rates Steady as Kevin Warsh Says Rising Treasury Yields Tighten Financial Conditions 
Japan Services Producer Prices Rise 3.2% in June, Supporting BOJ Rate Hike Expectations 
BoC arrives Wednesday at 10amET along with the Monetary Policy Report that includes refreshed forecasts. Governor Poloz and SDG Wilkins will host a press conference at 11:30amET.
The Canadian monetary policy announcement will be more about jawboning uncertainties within a base case policy framework that is in no rush to change. Having said this, the broad tone of the communications is likely to walk more on the cautiously optimistic side of the equation in such fashion as to remain faithful toward the Governor’s rebound narrative. If so, then at a minimum, the communications could be the further unwinding of near-term curve inversion.
NAFTA bloc vols and risk-reversals can jump, if we are correct that a standoff between the Trump administration and the Democrat-controlled House around the issue of USMCA ratification is higher odds than the market gives it credit for. BoC (Bank of Canada) on the other corner, is a major event for this week.
Hence, the CAD risk premia flags that owning EURCAD and EURMXN risk-reversals are good value hedges against a NAFTA accident.
We also continue to be positioned short CAD via a long-held CAD put/CHF call vs. USD put/CHF call option spread.
Ever since the low-likelihood threat of a US government shutdown became reality earlier in the year, our macro team has worried about another President Trump vs. Democratic House confrontation upending what was considered to be routine Congressional ratification of 2018's USMCA trade agreement.
We emphasized in the recent past that the administration is minded to complete the process by August, but this compressed timeline could put the President on a collision course with House Speaker Nancy Pelosi sooner rather than later.
Risks are that Trump actually withdraws from NAFTA 1.0 as a negotiating tactic in order to force the issue with the House – an option he and ranking members have been vocal about – leading to punitive sell-offs in CAD and MXN. Courtesy: JPM
Currency Strength Index: FxWirePro's hourly CAD spot index is flashing at 94 levels (which is bullish), hourly USD spot index was at 48 (bullish) while articulating at (10:41 GMT).
For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex
