- BoC and Fed deliver “hawkish” rate cuts
- US/China trade tensions ease in wake of Trump/Jinping meeting
- US dollar rallies on hawkish Fed.
USDCAD open: 1.3950, overnight range 1.3927-1.3971, close, 1.3942, WTI 60.08, Gold 3996.39
The Canadian dollar rallied following the Bank of Canada rate announcement. The Bank of Canada delivered a “hawkish” rate cut. It lowered the benchmark rate to 2.25 % as expected but signaled no intention to ease further. The statement noted that if inflation and growth evolve as projected, the current rate is appropriate to keep inflation near 2 % while supporting the economy’s structural transition. The message was clear—the BoC believes monetary policy has done its part, leaving fiscal measures to carry the next leg.
The Canadian dollar rallied ended abruptly after the FOMC cut rates by 25 bps. That was expected but Fed Chair Powell’s hawkish comments were not. He said, “future rate cuts are far from certain.” His comments strengthened the U.S. dollar across the board.
WTI oil traded in a 59.85–60.84 range, nearly matching Wednesday’s band. Prices found support after the Energy Information Administration reported a sharp 6.85 million-barrel drop in U.S. crude inventories last week.
Asian equity indexes finished mixed. Japan’s Topix gained 0.69 %, Hong Kong’s Hang Seng fell 0.24 %, and Australia’s ASX 200 dropped 0.48 %.
As of 7:20 AM, European indexes are negative. The UK FTSE 100 index is down by 0.48 %, the German DAX has lost 0.13 %, and the French CAC-40 index is off by 0.66 %. S&P 500 futures are flat, the U.S. Dollar Index (DXY) is 99.26 and the U.S. 10-year Treasury yield is 4.08 %,
EURUSD traded in a 1.1597–1.1637 range after the Fed’s unexpectedly hawkish tone following its rate cut. Traders largely ignored German inflation and GDP data as both came in close to forecasts, while Eurozone Economic Sentiment improved modestly to 96.8 from 95.6. Powell’s suggestion that a December rate cut is far from certain overshadowed today’s ECB meeting and kept the single currency under pressure.
GBPUSD is trading in a 1.3184–1.3219 band and remains heavy ahead of the UK budget and the Bank of England policy meeting. Markets expect the BoE to hold rates at 4.0 % until after the November 20 Autumn budget, although a few analysts are still calling for a 25 bp reduction. Sentiment remains cautious with traders reluctant to add fresh positions before the fiscal details are released.
USDJPY climbed within a 152.17–153.89 range and is testing the upper boundary as the Fed’s hawkish tone boosted the U.S. dollar. The Bank of Japan left policy unchanged as expected, citing the need for more data before considering any tightening. A sharp rise in the U.S. 10-year Treasury yield from 3.975 % to 4.09 % overnight added further support to the dollar, while intervention fears continue to lurk in the background.
AUDUSD traded in a 0.6567–0.6597 range, little changed despite signs of a thaw between Washington and Beijing. Broad U.S. dollar demand, driven by reduced expectations for a December Fed rate cut, offset any optimism from the easing of trade tensions. The pair remains anchored near the lower end of its recent range as risk appetite struggles to gain traction.
