- Canadian’s awaiting Fed Budget tomorrow.
- Global equities in positive territory.
- US dollar gains on hawkish Fed talk.
USDCAD open: 1.4046, overnight range 1.4009-1.4046, close, 1.4013, WTI 61.21, Gold 3998.55
The Canadian dollar added to Friday’s losses due to a wave fo US dollar demand against h teg-10 majors. The US government’s overtly hostile approach to Canada and trade is another negative weighing on the loonie.
The Federal government delivers its budget tomorrow and there are reports that the Liberals want it to trigger a non-confidence vote to force another election.
WTI oil bounced in a 60.50-61.59 band. Asian gains gave way to European losses after Opec and raised production in December by 137,000 (as expected)> Production increases between January and March were put on hold due to concerns of aggravating an oil glut.
The US dollar started the week on a firm footing. Traders took Fed Chair Jerome Powell’s reminder that a December rate cut was “not a done deal” as a green light to extend long dollar positions. The thaw in US–China trade relations added fuel to the move, helping lift the US Dollar Index (DXY) roughly 4% since mid-September.
Fed commentary added plenty of noise. Candidate Christopher Waller dismissed Powell’s argument that the government shutdown clouded the economic picture, insisting that “the fog story has got to stop.” Meanwhile, acting Governor Stephen Miran warned that hesitation could tip the economy into recession. Dallas Fed President Lorie Logan and Cleveland Fed President Beth Hammock, both non-voters, took the opposite side, arguing that the data didn’t justify further easing and inflation risks remain elevated.
Asian markets kicked off the week in positive territory, with Hong Kong’s Hang Seng up 0.97%, Japan’s Topix gaining 0.94%, and Australia’s ASX 200 adding 0.15%.
In Europe, as of 7:25 am, the German DAX leads the pack with a 1.14% rise, while the CAC-40 gained 0.22% and the FTSE 100 added 0.13%. S&P 500 futures pointed 0.35% higher, the 10-year US Treasury yield is 4.09%.
EURUSD traded in a 1.1508–1.1542 range, extending its gradual slide. German and Eurozone manufacturing PMI readings met expectations at 49.6 and 50.0, respectively, doing little to lift the single currency.
GBPUSD chopped between 1.3118 and 1.3149, pressured by broad dollar strength and growing speculation that the Bank of England will trim rates at Thursday’s policy meeting. Traders are also wary of the upcoming November 26 budget, which could feature tax hikes as the government looks to plug fiscal gaps.
USDJPY consolidated within a 153.99–154.29 band, underpinned by steady Treasury yields and lingering disappointment after the Bank of Japan left policy unchanged. The Fed’s hawkish stance continues to contrast sharply with the BoJ’s dovishness, keeping the yen on the defensive.
AUDUSD traded between 0.6539 and 0.6563, supported by improved risk tone tied to the US–China détente and a small uptick in Australia’s monthly inflation gauge (3.1% vs. 3.0% previously). Traders expect the RBA to stand pat on rates at Tuesday’s meeting.
