- Rising US Treasury yields undermining the Loonie
- Oil prices continue to climb
- US dollar trading with a modest bid in early NY trading
USDCAD open: 1.3811, overnight range 1.3798-1.3815, close 1.3806, WTI 97.59, Gold 4,392.93
The Canadian dollar traded lower yesterday as broad-based US dollar demand returned after the 10-year Treasury yield climbed from 4.78% on Tuesday to 4.861%. US Treasury Secretary Scott Bessent’s latest effort to push long-term borrowing costs lower appears to have fallen flat. Bessent tripled the size of US long-term debt issuance from $2.0 billion to $6.0 billion in a bid to calm jittery markets. It didn’t work. Long yields climbed to 4.873% overnight.
WTI traded higher, rising from $95.39 to $97.83 and is at $97.17 in NY today. Iran claimed to have struck US warships, a claim denied by the US, while also reportedly hitting a tanker with a drone.
Tehran is threatening to strike oil tankers docked in Kuwaiti and Bahraini ports if Washington hits any more Iranian vessels. US officials, for their part, are furious that the IRGC keeps lobbing missiles at American warships and are increasingly convinced Beijing is arming Iran with advanced weaponry.
Treasury Secretary Bessent tripled the size of US long-term debt issuance from $2.0 billion to $6.0 billion in a bid to calm jittery markets. It flopped spectacularly. Long bond yields climbed instead, as traders read the move as an attempt to game interest rates for political advantage ahead of the mid-terms.
Asian markets finished mostly lower, with Hong Kong's Hang Seng shedding 1.27% and Australia's ASX 200 down 1.03%, while Tokyo's Topix bucked the trend to add 0.20%.
In Europe, as of 7:30 am, France's CAC 40 had gained 0.17%, Germany's DAX sat flat, and the UK's FTSE 100 slipped 0.31%. S&P 500 futures were little changed, the 10-year Treasury yield stood at 4.867%, and the dollar index is 98.83.
EURUSD idled in a 1.1620-1.1642 band as traders awaited this morning's ECB decision. A quarter-point hike is already fully priced in, leaving the real intrigue in Christine Lagarde's tone, whether she leans hawkish enough to hint at another increase before year-end or softens the message and withholds any signal. Germany's HICP inflation print landed in line with forecasts and barely registered.
GBPUSD is trading lower in a 1.3529-1.3561 range due to rising US Treasury yields and the spike in Brent crude to $102.72 overnight which escalates UK inflation risks. .
USDJPY sagged within a 153.30-153.88 range under the weight of growing bets on additional BoJ tightening beyond the 25 basis point hike already expected for September 18, fuelled by hawkish remarks from several board members.
AUDUSD is trading lower in a 0.7193-0.7204 range. Surging oil prices are underpinning the Aussie thanks to its massive LNG export book, which more than offsets the extra cost of importing crude, and broader gains across commodity prices are lending further support.
Today’s US data includes weekly jobless claims and the Producer Price Index (PPI).
