- Trump cancels US/Canada trade talks.
- Oil prices ending the weak over 7% higher
- US dollar opens with modest bid ahead of US CPI data.
USDCAD open: 1.4020, overnight range 1.3974-1.4029 close, 1.3994, WTI 61.68, Gold 4060.85
The Canadian dollar sank in the wake a Trump Truth Social tweet that said he was cancelling Canada/US trade talks. He was annoyed after the Province of Ontario’s ad campaign which ran in every major Republican jurisdiction and highlighted former President Reagan’s views on tariffs.
Trump wrote: “The Ronald Reagan Foundation has just announced that Canada has fraudulently used an advertisement, which is FAKE, featuring Ronald Reagan speaking negatively about Tariffs. The ad was for $75,000,000. They only did this to interfere with the decision of the U.S. Supreme Court, and other courts. TARIFFS ARE VERY IMPORTANT TO THE NATIONAL SECURITY, AND ECONOMY, OF THE U.S.A. Based on their egregious behavior, ALL TRADE NEGOTIATIONS WITH CANADA ARE HEREBY TERMINATED. Thank you for your attention to this matter! President DJT”
In Asia, Japan’s Topix gained 0.48%, Hong Kong’s Hang Seng added 0.74%, and Australia’s ASX 200 slipped 0.15%.
As of 7: 30 AM, European indexes were trading lower. The CAC 40 is down 0.56%, The German Dax and FTSE 100 are flat. US equity futures rose 0.28%, the US Dollar Index was steady near 99.04. The US 10-year Treasury yield was 4.01%.
USDCPI data for September is expected to show inflation rising 3.1% y/y compared to 2.9% in August, while core inflation is forecast to hold steady at 3.1%. The numbers are unlikely to shift sentiment much, as many analysts question their reliability. Scotiabank economist Derek Holt noted that more than one-third of the CPI basket is now estimated using alternative methods rather than hard data.
EURUSD traded in a 1.1601-1.1628 range, supported by stronger Eurozone PMI reports. Manufacturing PMI printed 50 versus 49.5 expected, Services PMI came in at 52.6 compared to 51.1, and Composite PMI was 52.2 versus 51.0. German readings also beat expectations, though manufacturing at 49.6 remained in contraction. Market activity was muted ahead of next week’s FOMC decision and the Trump/Xi meeting in South Korea.
GBPUSD drifted within a 1.3301-1.3333 band, finding some support from upbeat UK data. Retail sales rose 1.5% m/m against a 0.6% forecast, while Services PMI was 51.1 and Manufacturing PMI improved to 49.6 versus 46.6 expected. The results indicate the consumer remains resilient, which could dissuade the BoE from cutting rates.
USDJPY traded in a 152.48-153.06 range, with gains driven by higher US Treasury yields and reports that Japan will raise defense spending to 2% of GDP by March 2026. The move is widely viewed as an effort to strengthen relations ahead of Prime Minister Kishida’s meeting with Trump on Monday.
AUDUSD held to a 0.6493-0.6518 range, staying defensive ahead of the US inflation report and next week’s Trump/Xi summit.
