- Month-end flows may limit US dollar gains in the morning.
- Canada August GDP expected to be flat.
- US dollar consolidating yesterdays gains.
USDCAD open: 1.4005, overnight range 1.3979-1.4011, close, 1.3987, WTI 60.11, Gold 4008.56
The Canadian dollar reversed yesterday mornings gains and traded negatively in the afternoon and overnight due to broad-based US dollar demand as the Fed’s cautiously hawkish bias continued to linger.
China President Xi Jinping met with Prime Minister Mark Carney today. Mr. Carney claimed he was happy with the meeting and said “We now have a turning point in the relationship — a turning point that creates opportunities for Canadian families, for Canadian businesses and Canadian workers.”
WTI oil traded in a tight 60.00-60.53 range due to soft Chinese data and speculation of another Opec production increase being announced this weekend.
The US dollar extended its upward momentum after gaining traction yesterday afternoon. A combination of firmer Treasury yields, easing China-US trade tensions, and Fed Chair Powell’s hawkish remarks spurred traders to trim short-dollar exposure. Positive earnings from major US tech firms also lent support. With month-end flows approaching, expectations are that portfolio managers will need to sell dollars at the 11:00 am fixing window.
Asian equity markets ended mixed overnight, with Japan’s Topix posting a 0.94% gain while Hong Kong’s Hang Seng dropped 1.43% and Australia’s ASX 200 was unchanged.
As of 7:25 AM, the UK FTSE 100 is down 0.44%, Germany’s DAX has fallen 0.36%, and France’s CAC-40 is lower by 0.21%. US equity futures are showing modest strength, with S&P 500 contracts up 0.66%. The US 10-year Treasury yield is steady at 4.11%, and the US Dollar Index sits at 99.543
EURUSD is hovering in a narrow 1.1555–1.1578 band after retreating on Thursday. Disappointing German retail sales and weaker Eurozone inflation data added to the euro’s malaise. The ECB held policy rates unchanged, keeping the main refinancing rate at 2.15%, the deposit rate at 2.00%, and the lending rate at 2.40%, while President Lagarde emphasized the need for continued vigilance on inflation trends.
GBPUSD is struggling within a 1.3125–1.3165 range as traders remain cautious ahead of next week’s Bank of England decision and the November 26 autumn budget. The Fed’s hawkish tone earlier this week continues to weigh on sentiment, reinforcing dollar demand against the pound.
USDJPY is confined between 153.66 and 154.41 after dipping briefly when Japan’s Finance Minister Satsuki Katayama warned about disorderly market moves. The comments had little lasting impact, and the yen quickly surrendered its brief gains.
AUDUSD is soft within a 0.6531–0.6561 band as the stronger greenback overshadowed the mild boost from improving China-US relations. Domestic data showed Australia’s Producer Price Index rising 1.0% in the September quarter and 3.5% year-over-year, while traders await next week’s RBA policy outcome for further direction.
