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Wall Street set to open higher, USDCAD moves lower after inflation print

- Wall Street opens higher following decent gains in the other parts of the world
- USDCAD trades below 1.33 in the aftermath of the inflation print release
- Morgan Stanley (MS.US) surprises with smaller than expected drop in trading revenue

While the Asian session was mixed, stock from the Old Continent continue to perform superbly this week. In turn, futures markets point to another green opening on Wall Street this week. In the meantime, Canadian dollar got a major boost from better-than-expected price growth data.

Following a better-than-expected Canadian inflation reading USDCAD dipped below the 1.3290 handle that served as the lower limit of the recent trading range. The pair even tested the upward sloping trendline in the 1.3270 area. Part of the decline was already recouped and the pair is back near the 1.3290 handle. Daily close above this hurdle could hint at more sideways trading. Source: xStation5

Core inflation beat sends Canadian dollar higher

One of a few noteworthy readings that were scheduled for today was released at 1:30 pm GMT and it was the Canadian inflation report for March. Headline measure was expected to show an acceleration from 1.5% in February to 1.9% YoY in March. While expectations were quite high the actual reading still managed to meet them. However, even more interesting were the results with omission of the most volatile items. The median core inflation gauge was seen remaining unchanged at 1.8% YoY but the actual reading showed an acceleration to 2.1% YoY. Overall, energy was the biggest contributor. Interestingly, it was contributing to the core gauges as well as bulk of the gain came from higher transportation costs that were fuelled by more expensive gasoline. In the aftermath of the release USDCAD took a fully justified dive below the 1.33 handle and is eyeing a test of the upward sloping trendline.

In spite of painting a spinning top candlestick pattern yesterday, the US500 index (S&P 500 futures underlying) continues to move higher. The index is trading less than 30 points below its ATH and a break above is getting more and more probable as companies tend to beat earnings estimates of the market. Source: xStation5

Earnings of note released today

Morgan Stanley (MS.US) reported its first quarter earnings today. The Bank bucked the trend present in reports of other major investment banks. Namely, Morgan Stanley experienced smaller drop in bond trading revenue than analysts’ expected. It was also smaller than the one experienced by its rivals. Overall, Morgan Stanley reported EPS of $1.33 against expected $1.16 and a revenue of $10.286 billion while markets expected $9.909 billion.

PepsiCo (PEP.US) was another major US company to report earnings today and another one to post sweet beats in revenue and earnings. Indeed, EPS declined to $0.97 but analysts’ expected a decline to $0.91. Revenue of $12.9 billion was around 1% higher than the median estimate.

PepsiCo (PEP.US) began to trade within a wide, upward channel in July 2018. The stock experienced a significant surge on Monday that brought the price to the upper limit of the channel. However, despite yesterday’s pullback the stock may leave the channel today as pre-market trading hints at opening near the $125 handle. Source: xStation5

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Chart of the day - USDCAD (03.12.2021)
Morning wrap (03.12.2021)
Daily summary: US stocks rebound, OPEC+ sticks to production plan