- Trump pauses Canada tariffs until end of Friday
- Treasury yields soften and greenback ticks lower.
- US opens with losses across the board.
USDCAD open: 1.3867, overnight range 1.3862-1.3879, close 1.3875, WTI 84.03, Gold 4,393.03
The Canadian dollar rose in sympathy with nearly all of the G-7 majors as Treasury yields pulled back ahead of today's release of the July 29 FOMC meeting minutes. The biggest news for Canada didn’t register in FX trading.
Trump's 50% tariff deadline arrived and expired, and to nobody's surprise he punted, extending the pause until the end of the day on August 21.
The announcement landed on the White House website under the banner "TEMPORARY SUSPENSION OF ADDITIONAL DUTIES TO OFFSET CANADIAN DISCRIMINATION AGAINST THE COMMERCE OF THE UNITED STATES WITH RESPECT TO ALCOHOLIC BEVERAGES, DAIRY, AND MOTOR VEHICLES," and he amplified it on Truth Social, writing "I have paused the 50% Tariffs against Canada, that were scheduled to kick in tomorrow morning for a three day period, based on the fact that Canada and the U.S.A., subject to the finalization of documents, have a DEAL! The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave! Thank you for your attention to this matter. President DONALD J. TRUMP."
WTI oil is holding steady with a bid inside a 84.27-85.41 band. Trump claimed the US is not talking to Iran, something Tehran insists has been true all along. He also posted an image depicting the Strait of Hormuz as new US territory, which raises the obvious question, "Why has America closed the Strait?"
Today's FOMC minutes are on the calendar but are not expected to generate much excitement. August's string of disappointing US economic reports has made earlier discussions about the case for higher rates feel dated, robbing the release of much of its relevance.
Equity markets in Asia finished mostly lower. The Hong Kong Hang Seng managed to close flat, but Japan's Topix tumbled 3.09% and Australia's ASX 200 slipped 0.18%.
European trading as of 7:00 am shows red across most bourses, with France's CAC-40 the exception, gaining 0.32%. The UK FTSE 100 has shed 0.25% while the German DAX has given back 0.11%. S&P 500 futures are flat, the US 10-year Treasury yield has eased to 4.694%, the DXY sits at 99.36, and gold is changing hands at $4,366.83.
EURUSD chopped about in a 1.1570-1.1611 band overnight. The single currency found support from broad US dollar softness, while Tuesday's hawkish remarks from ECB Chief Economist Philip Lane that Eurozone inflation of 3.0% remains uncomfortably high helped to underpin prices. July headline inflation printed at 2.9%, matching forecasts, and the core Harmonized Index of Consumer Prices climbed 2.5% y/y.
GBPUSD climbed steadily inside a 1.3523-1.3566 range, lifted by greenback weakness and hotter UK inflation. July CPI accelerated to 2.9% y/y from 2.6% in June, while retail prices gained 0.6% versus 0.3% the previous month, largely reflecting increased energy costs.
USDJPY slid to the bottom of its 159.00-159.64 range in early New York trading. The retreat in US Treasury yields did most of the damage, with pre-FOMC minutes caution adding to the weight. Lingering fears of Bank of Japan intervention continue to discourage aggressive topside bets.
AUDUSD bounced between 0.7067-0.7090 as traders locked in profits following the weakness in Asian equities. The selling dried up at the base of the August uptrend line, an area underpinned by the RBA's hawkish stance. Attention now turns to Thursday's domestic employment report, where forecasters anticipate a gain of 15,000 jobs after last month's 75,000 surge.
