- BoC and Fed rate cuts met with a shrug
- BoE leaves rates unchanged
- US dollar trading indecisively
USDCAD open 1.3775, overnight range 1.3766-1.3801, close, 1.3775, WTI 63.5, Gold 3671.61
The Canadian dollar barely reacted to the Bank of Canada’s first rate cut in half a year, a move that had already been priced in after a string of soft economic releases. Policymakers signaled they were open to easing further, noting that inflationary pressure had eased to a degree.
The bigger jolt came from the Fed. A 25 bp rate cut knocked USDCAD down to 1.3727, but the dip didn’t last—within moments it was back near 1.3765 as traders realized the Fed wasn’t nearly dovish as they had hoped.
WTI crude churned sideways between 63.45 and 64.26, with the latest Fed move keeping a lid on gains. Prices look locked in a broader 62.00–66.00 corridor, where worries about war-related supply shocks are balanced by rising Opec output.
The Fed didn’t live up to the hype. Instead of a sweeping dovish turn, it offered what Powell called a “risk management cut,” stressing that any further moves would be made one meeting at a time. Nine of nineteen policymakers still pencil in two more rate cuts this year, but the mixed message didn’t inspire markets. The initial knee-jerk dovish reaction evaporated, leaving Wall Street flat, the US dollar uneven, and 10-year Treasury yields bouncing back to 4.096% from a dip to 3.99%.
Asian trading was a choppy affair. Japan’s Topix managed a 0.41% gain, while Australia’s ASX 200 slid 0.83% on the back of weak jobs data. Hong Kong’s Hang Seng dropped 1.35%. European bourses were more upbeat by early New York hours, with the DAX up 1.16%, the CAC 40 climbing 1.10%, and the FTSE 100 eking out a 0.17% rise.
US futures found some fuel, advancing 0.77% on optimism after Nvidia pledged a $5 billion investment in Intel. The dollar index sat at 96.91, gold traded at 3667.96, and 10-year Treasury yields hovered near 4.052%.
EURUSD chopped between 1.1780 and 1.1849 overnight and is testing the top of that range as New York gets underway. The gains come despite labour unrest in France where teachers, health workers, and rail staff are striking against austerity measures.
GBPUSD pushed up from 1.3586 in Asia to 1.3661 in New York before easing to 1.3646 after the Bank of England left rates unchanged at 4.0% and slowed the pace of its balance-sheet reduction.
USDJPY climbed within a 146.77-147.53 range, clawing back most of the week’s earlier losses. Yesterday’s dip to 145.50 was quickly reversed in a classic “sell the rumour, buy the fact” move after the Fed failed to deliver a dovish surprise. Weaker August Machinery Orders added no help. Traders now wait for the Bank of Japan’s decision tomorrow.
AUDUSD dropped after soft employment data, sliding to 0.6616 from 0.6605, but the dip was short-lived and the pair rebounded to 0.6659 in New York. Australia shed 5,400 jobs, though the unemployment rate held steady at 4.2%.
Today’s US releases feature weekly jobless claims, expected at 240,000 after last week’s 263,000, and the Philadelphia Fed Manufacturing Survey, forecast at 2.3 after printing –0.3 in August.
