US stocks futures implying gains at the open

The major US stock indices are set to open higher as implied by the futures:

• S&P index up 23.5 points or 0.45%. Yesterday the index rose 7.94 points or 0.15%
• Dow Jones up 125 points or 0.32%. Yesterday the index rose 140.26 points or 0.36%
• NASDAQ up 138 points or 0.74%. Yesterday the index rose 28.38 points or 0.17%.

The Bank of Canada interest rate decision will be released at 9:45 AM ET. The Bank of Canada (BoC) is expected to cut rates by 25 basis points at its June 5th meeting, bringing the key rate to 4.75%. This view is supported by 22 out of 29 analysts surveyed by Reuters, although seven analysts predict rates will remain at 5.00%. Recent data shows inflation falling within the BoC’s target range, while growth data has been disappointing. Money markets currently assign an 80% probability to a rate cut following dismal GDP data. Despite this, guidance from the BoC will be closely watched, with some analysts skeptical about the extent to which the BoC can diverge from the Federal Reserve, which is not expected to cut rates until September (60% chance). There will be no Monetary Policy Report (MPR) release at this meeting, but Governor Macklem will hold a press conference starting at 10:30 AM ET.

Looking ahead, markets anticipate 60 basis points of easing from the BoC by year-end. Fourteen analysts expect rates to end the year at 4.00%, another fourteen at 4.25%, and one expects five cuts bringing the rate to 3.75%. The BoC’s potential rate cuts may reignite property prices and pressure living costs, though current forecasts for house price inflation are subdued.

This article was written by Greg Michalowski at www.forexlive.com.