- France names new Prime Minister
- PPI data may have limited impact
- US dollar recoups some losses
USDCAD open 1.3849, overnight range 1.3839-1.3864, close, 1.3843, WTI 63.03, Gold 3654.88
The Canadian dollar dropped sharply yesterday after the US employment picture was found to be in worse shape than previously expected.
The Bureau of Labor Statistics (BLS) said there were 911,000 fewer jobs between March 2024 and March 2025 then previously reported. The news was largely expected but it did raise questions about the health of the Canadian job market. If the American economy is far weaker than estimated, it doesn’t bode well for Canada either.
WTI oil prices consolidated yesterday’s gains on increased geopolitical tensions. Russian drones that encroached NATO-member Poland’s territory were shot down while Israeli bombers took out a Hamas sanctuary in Qatar.
The US Producer Price Index for August is anticipated to show that the core measure, excluding food and energy, increased 0.3% m/m, slower than the 0.9% recorded in July, and 3.5% y/y compared to 3.7% previously. The headline figure is projected to remain at 3.3%. A stronger-than-expected result could stir stagflation chatter, though it is unlikely to dampen the prevailing enthusiasm for Fed rate cuts.
Asian equity markets ended higher, led by a 1.01% advance in Hong Kong’s Hang Seng, while Japan’s Topix added 0.60% and Australia’s ASX 200 rose 0.31%.
By 7:20am EDT, the CAC 40 had gained 0.61%, the FTSE 100 climbed 0.43%, and the DAX edged up 0.16%. S&P 500 futures were 0.30% higher. Meanwhile, the US Dollar Index was up at 97.79, and the US 10-year Treasury yield ticked up to 4.087%.
EURUSD traded in a 1.1684-1.1719 band ahead of Thursday’s ECB meeting. Prices dipped early after news that Polish forces downed Russian drones in their airspace, but the move faded and the pair rebounded to open in New York near session highs. Domestic politics added to the mix with Sebastien Lecornu appointed as France’s new Prime Minister, tasked first with tackling violent “Block Everything” protests in Paris.
GBPUSD moved inside a 1.3514-1.3546 corridor. The pair is underpinned by expectations that the Fed’s next steps will be dovish, while speculation grows that the ECB may keep rates unchanged but issue a softer outlook. At the same time, traders believe the Bank of England will also hold steady but tilt slightly hawkish, offering the pound a measure of support.
USDJPY drifted within a 147.27-147.59 range. Softer US Treasury yields and chatter of a potential tariff arrangement with Washington have created space for the Bank of Japan to consider tightening, adding modest pressure on the currency pair.
AUDUSD consolidated gains in a 0.6581-0.6616 range. The currency remains supported by expectations of a more aggressive pace of Fed rate reductions and signs of easing trade tensions between the US and China, both of which are lifting sentiment toward the Australian dollar.
There is no Canadian economic data due today.
