- Traders cautious ahead of the weekend
- Global equity markets extend losses.
- The US dollar opened higher against the majors
USDCAD open: 1.3853, overnight range 1.3845-1.3862, close 1.3861, WTI 96.18, Gold 4427.09
The Canadian dollar traded sideways but stayed supported by risk aversion. The US dollar remains broadly bid as traders worry that Trump could escalate the Iran conflict by deploying troops as early as this weekend. Trump’s delay on Iranian energy infrastructure strikes seen as a tactical pause rather than de-escalation.
The Canadian dollar is also being weighed down by Canada/US 10-year yield spreads, which have widened to -90.4 from -79.8 on Tuesday.
Yesterday, Bank of Canada Deputy Governor Carolyn Rogers signaled that rates may stay higher for longer as policymakers deal with structural economic changes and persistent uncertainty. While inflation expectations remain anchored, they are vulnerable, leaving the Bank cautious about easing and prepared to tighten if energy-driven price pressures broaden.
WTI oil traded in a 92.14-96.91 range, climbing on fears the US-Iran conflict will intensify over the weekend. Concerns are growing that strikes on Iranian energy assets could trigger renewed Houthi attacks in the Red Sea, particularly around the Bab-el-Mandeb Strait, potentially disrupting another 10% of global oil supply.
Asian equities ended mixed but tilted positive. Japan’s Topix added 0.19% and Hong Kong’s Hang Seng gained 0.38%, while Australia’s ASX slipped 0.11%.
As of 7:30 am. Germany’s DAX is down 1.62%, France’s CAC 40 has dropped 1.10%, and the UK FTSE 100 is off 0.74%. US futures are softer with the S&P 500 down 0.43%, the 10-year Treasury yield at 4.465%, and the dollar index at 100.07.
EURUSD traded in a 1.1515-1.1547 range with a softer tone as traders head into the weekend cautious due to the Iran conflict. Ongoing attacks by the IRGC across Gulf regions have supported oil prices, leaving the euro largely driven by swings in global risk sentiment in the absence of meaningful Eurozone data.
GBPUSD danced in a 1.3302-1.3348 range and remained on the defensive. Higher energy prices, weak retail sales, and deteriorating GfK consumer confidence, alongside broader risk aversion, combined to weigh on sterling.
USDJPY climbed in a 159.46-159.98 range and edged higher, supported by rising US yields and firm oil prices. The 10-year Treasury yield has climbed from 4.1% overnight and 4.30% earlier in the week to near 4.467%, although gains in the pair remain limited by persistent intervention risk.
AUDUSD ticked lower in a 0.6872-0.6913 range, stabilizing after recent losses. The pair continues to be pressured by cautious positioning and general risk-off flows ahead of the weekend.
The Michigan Consumer Sentiment report is expected to be unchanged, although its impact is likely to be overshadowed by developments in the US-Iran conflict.
