The US housing market and Canada retail sales are in focus

In reaction to Wednesday's Fed minutes, the dollar index calmly consolidated around 102.03 after seeing an immediate rebound following the announcement. Nevertheless, it was a mild bounce as the Asian session opened. Some investors noted that there were few surprises in the minutes. Long-term Treasury yields held steady overnight while US shares were up.

75 bps rate hike off the agenda

A few nerves were temporarily eased by the FOMC Minutes, released overnight. These minutes indicated that the central bank would hike by 50 basis points again in June and July before pausing in September. This means there is no imminent threat of a 75 basis point hike. In combination with some weakness in US data, notably in the housing market, this combination triggers a surge in US equity markets and the US dollar.

It is said that the FOMC probably will not be able to deliver a soft landing for the US economy due to their strong enthusiasm for fighting inflation and willingness to constrain monetary policy to keep inflation low. Hence, the USD and the Yen will be supported by signs that the US economy is losing momentum.

Elsewhere, the Bank of Korea also raised its policy rates by 0.25% this morning, as was expected. The KOSPI and the Korean won have shown no impact, suggesting the move is already well priced. On the same day, the governor of the Reserve Bank of New Zealand, Ms Orr, gave testimony before a parliamentary committee. Governor Orr was very hawkish and said policy rates should remain elevated for a long time to keep inflation in check.

Today is Ascension Day in Europe. All of Scandinavia, France, and Germany, among the biggest economies in Europe, are closed for the holiday. And Indonesia is closed too. Due to that, we're likely to see muted activity in Europe today, with data being strictly second-tier in today's calendar.

Events of today

Given the weakness of recent existing and new home sales in the US, Pending Home Sales figures will be closely watched on Thursday. Pending home sales are expected to extend their decline in April from -1.2% to -2.0%. 

This will overshadow the 2nd estimate of GDP for Q1 and initial jobless claims. The number of individuals who filed for unemployment insurance for the first time during the past week is expected to fall to 215K from 218K. It means another week over 200K, the highest record since March 2021. 

Canada's Core retail sales in March are among today's highly expected data. The monthly retail sales are forecast to cool down in March from 2.1% to 2%, mainly caused by higher inflation and rising prices.