- Governor Macklem reiterates that rates could rise
- US Iran ceasefire on shaky ground
- The US dollar opens with modest bid.
USDCAD open: 1.3612, overnight range 1.3612-1.3630, close 1.3626, WTI 104.05, Gold 4,556.15
The Canadian dollar is drifting aimlessly on the current of US dollar sentiment and headlines from the Middle East.
BoC Governor Tiff Macklem appeared before the Senate Finance Committee and reiterated that inflation uncertainty is "unusually elevated" which could lead to higher borrowing costs.
WTI traded sideways through the overnight session but remains in an uptrend so long as prices hold above 98.50. The probability of renewed US-Iran hostilities is climbing, and Tuesday's report of an explosion and fire aboard a South Korean cargo vessel in the Strait did nothing to calm nerves.
The ceasefire between the US and Iran is technically holding, though the IRGC crews whose small vessels were destroyed by American forces might take issue with that characterization. UAE officials are equally unimpressed, after a drone strike ignited a fire at one of its ports. risk.
Asian sessions were quiet, with Japanese and mainland Chinese markets shut for holidays. Australia's ASX 200 slipped 0.19% and Hong Kong's Hang Seng gave back 0.76%.
European bourses are mixed heading into the North American open. The German DAX has added 1.23% and the French CAC 40 is up 0.55%, while the UK FTSE 100 is off 1.13%. S&P 500 futures are pointing 0.29% higher. The 10-year Treasury yield sits at 4.436%, the DXY is at 98.52, and spot gold (XAUUSD) is at [updated gold price].
EURUSD held a narrow 1.1677-1.1699 band as traders kept a wary eye on ceasefire fragility in the Middle East. Despite a substantial US naval presence and Washington's pledge to escort commercial traffic through the Strait of Hormuz, Iran has kept the waterway effectively shut. Brent crude holding firm is adding pressure to the single currency.
GBPUSD edged up within a 1.3514-1.3550 range, with growing conviction that the Bank of England may need to resume tightening keeping sterling supported. A slight pullback in Brent provided additional lift. Markets are waiting on today's US data before making any decisive moves.
USDJPY traded quietly in a 157.09-157.83 range with Golden Week keeping Japanese participants on the sidelines for one final session. No signs of BoJ intervention emerged, leaving the pair propped up by the Fed's hawkish posture and elevated oil prices.
AUDUSD bounced within a 0.7136-0.7171 range after the RBA delivered a rate hike that surprised absolutely nobody, lifting its benchmark to 4.35% from 4.10%. The move still failed to carry the pair past the prior session's high. Governor Michele Bullock pointed to fuel-driven inflation stemming from the Iran conflict as justification for tightening, while her description of policy as "restrictive" was widely read as a signal that this hike is likely the last for some time.
Today's US data includes Trade, JOLTS Job openings, ISM Services PMI, and New Home Sales.
