US: Core inflation slows amid energy surge
The overall consumer price index surged by a widely anticipated 0.9% for the month, marking the largest upward leap since 2022. However, underlying economic trends are actually softening. Core inflation rose by a modest 0.2% monthly and 2.6% annually. Since both of the annual metrics arrived slightly below market expectations, this suggests that fundamental price pressures are stabilizing at a much lower pace.
This underlying stability is currently overshadowed by a massive spike in energy costs stemming from recent geopolitical conflicts. The overarching energy index experienced an aggressive 11% monthly jump, which represents its largest increase since 2005. Furthermore, gasoline prices alone surged by over 21% in a single month. These steep increases clearly illustrate the immediate economic fallout from the Iran war, leaving economists debating whether this energy-driven inflation shock will be temporary or long-lasting.
Despite these energy concerns, broader financial markets are reacting with surprising optimism. Investors were heavily positioned for a hotter report, yet the bond market response remains quite muted, with two-year Treasury yields ticking down only slightly today. Geopolitical de-escalation efforts have also pushed the VIX fear gauge down significantly and helped major US equities recover their footing. Currency markets reflect this shifting sentiment too, as the US dollar index is currently trading at its lowest point of the day and is down noticeably for the week around 1.3%.
This unique blend of easing core prices and soaring energy costs leaves the Federal Reserve in a rather difficult position. Traders are now slightly increasing their wagers on central bank interest rate cuts occurring later this year. Policymakers, however, are carefully monitoring the labor market alongside sticky alternative inflation metrics. With recent payroll figures showing job growth, the central bank stays in the delicately balance of global tension risks against a domestic workforce that refuses to cool down.
CAD: Canadian jobs hold steady in March
Canada’s labour market showed little movement last month, adding 14,100 jobs to closely match the 15,000 expected. Furthermore, the overall unemployment rate stayed perfectly flat at 6.7%. Because the numbers were so close to forecasts, investors essentially shrugged off the news. As a result, the Canadian dollar showed no major reaction and continues trading closer to its lowest level of the week at 1.3815.
Even though the headline job numbers were predictable, wage growth delivered a noticeable surprise. The hourly wage rate for permanent employees jumped by 5.1% year-over-year, easily beating the 4.3% market estimate. Statistics Canada pointed out that overall wages are growing at their fastest pace since late 2024. Interestingly, this recent boost in pay was primarily driven by older workers, adding some hidden heat to an otherwise calm economic report.
Looking beneath the surface, employment shifts varied wildly across different industries and provinces. The natural resources and personal services sectors saw healthy hiring, while finance and real estate unfortunately shed jobs. On a regional level, British Columbia faced a tough month with significant job losses pushing its local unemployment rate higher. Meanwhile, prairie provinces like Manitoba and Saskatchewan stepped up to balance the national scales with solid employment gains.
Finally, Ontario continues to experience challenging conditions for local job seekers. Southern regions are feeling the pinch especially hard, with cities like London and Windsor sporting unemployment rates well above 8%. Reports suggest this struggle is partly tied to ongoing economic uncertainty surrounding export tariffs to the United States.
EUR: Euro rides fragile optimism and hawkish tailwinds
EUR/USD spent yesterday testing a cluster of flat long‑term moving averages just below the 1.17 line, closing just barely above them by the end. Near‑zero slopes on these gauges point to directionless underlying momentum, yet the pair’s persistence in challenging them signals growing confidence among euro buyers. EUR/USD has now closed higher for four consecutive sessions since April 6, reflecting a more assertive bullish posture as de‑escalation hopes build.
Despite a still‑fragile truce – with Israel’s continued military operations in Lebanon now a key point of contention – markets appear to believe the broader trajectory is toward de‑escalation. Strikes have fallen sharply since the ceasefire announcements, and both sides look more open to diplomacy than they were just days ago.
Against this backdrop of cautious optimism, the euro is enjoying a bit of a honeymoon: the ceasefire has improved risk sentiment, the diplomatic channel remains intact, and the ECB still looks comparatively hawkish versus the Fed. Even so, markets may lose patience quickly if they are not met with clearer conditions attached to the ceasefire and tangible progress toward something more durable.
We remain skeptical of a more confident foothold in the 1.17 area this week, given the still‑high uncertainty on the ceasefire front.
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Calendar: April 6 – 10
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
