- Fed rate cut and BoC hold give Loonie a lift
- Global equities are mixed after Oracle earnings miss estimates
- US dollar falls but is off its worst levels.
USDCAD open: 1.3805, overnight range 1.3785-1.3923, close 1.3794, WTI 57.57, Gold 4216.96.
The Canadian dollar traded little changed after the Bank of Canada left interest rates on hold. The decision was widely expected and the BoC justified it saying that inflation was evolving as expected, the labour markets is showing signs of improvement and because of the fiscal stimulus announced in the budget. There view since the previous meeting that GDP will expand at a moderate pace in 2026 and inflation will remain close to target has not changed.
WTI fell to 57.52 from 58.95 as traders focused on rising oil glut concerns especially if the Trump brokered Ukraine and Russia peace deal is achieved.
The Fed delivered the widely expected cut to 3.75%, but the vote was not unanimous. That part was no surprise either. Miran was always going to push for a half-point move, while Goolsbee and Schmnid preferred to stay on hold. Later, The dovish outlook gained more oxygen after NEC Director Kevin Hassett, viewed as a possible next Fed Chair, said there is plenty of room for additional cuts.
In Asia, the Topix fell 0.94%, the Hang Seng finished unchanged, and Australia’s ASX 200 gained 0.15%. By 7:15 am, European markets were mostly firm. The FTSE 100 rose 0.10%, the CAC 40 gained 0.42%, and the DAX rose 0.16%. S&P 500 futures slipped 0.22%, the Dollar Index sat at 98.50 and, the US 10-year yield is 4.132%
EURUSD climbed after the Fed and extended gains overnight inside a 1.1683 to 1.1713 band. Traders expect the Fed to keep trimming rates while the ECB holds steady for a long stretch. The Swiss National Bank kept its policy rate at zero and predicted inflation will ease to 0.3 percent next year from 0.5 percent.
GBPUSD moved higher in a 1.3355 to 1.3392 range as the softer US dollar tone persisted after the Fed. Gains were limited by expectations that the Bank of England will trim rates to 3.75 percent next week.
USDJPY slipped from 156.16 to 155.50 after touching 156.97 in the aftermath of the Fed decision. The pullback reflected speculation that the Fed was not as hawkish as feared. Talk of a BoJ rate hike next week and ongoing intervention concerns helped cap the upside.
AUDUSD bounced in a 0.6627 to 0.6679 band. The post-Fed rally stalled at 0.6686 before a sharply weaker Australian jobs report knocked the currency lower. Economists expected a 20,000 gain but the result was a loss of 21,000. The unemployment rate held at 4.3 percent, consistent with the RBA comment that labour conditions are still somewhat tight. That reminder helped AUDUSD bounce off the lows.
Today’s data includes Canada merchandise trade for September, US trade data, and weekly jobless claims.
