- Loonie consolidating yesterdays losses
- Rising Treasury yields underpin greenback
- US dollar opens mixed to slightly bid
USDCAD open: 1.4007, overnight range 1.3993-1.4014, close 1.4000, WTI 59.35, Gold 4185.96
The Canadian dollar is under pressure but off its worst level after a overnight quiet session.
Friday’s post GDP gains have given way to losses after the jump in US 10 year Treasury yields signaled a tilt toward risk aversion. The greenback picked up additional support from the latest ISM Manufacturing PMI report, which slipped to 48.2 from 48.7. Softer new orders at 47.4 and an employment reading of 44.0 pointed to fading demand and ongoing reductions in staffing, a combination that kept traders cautious.
WTI oil is struggling to find direction in a 59.09-59.67 range. The recent news that Opec decided not to increase production for at the last Q1 was not enough to counter oversupply fears. In addition, the risk of a supply disruption if Trump invades Venezuela is countered by the risk that a Russian Ukraine peace plan would more than offset an lost Venezuela production.
Asian stocks were subdued. Hong Kong’s Hang Seng gained 0.24 percent, Australia’s ASX 200 rose 0.17 percent, and Japan’s Topix was flat.
As of 7:45 am, the German DAX up gave up earlier gains but is still up by 0.42%. The CAC 40 has risen by0.33%, and the FTSE 100 has gained 0.21%. The US dollar index (DXY) is 99.42, and the US 10 year yield is 4.114%.
EURUSD traded in a 1.1599 to 1.1616 range and stayed quiet as traders monitored developments around Russia and Ukraine. Eurozone inflation edged up to 2.2 percent from 2.1 percent, a variation too small to influence ECB policy, and markets ignored the release. ECB official Martin Kocher reinforced that stance by saying monetary policy cannot be used for fine tuned economic management.
GBPUSD chopped about in a 1.3181 to 1.3222 range. UK shop prices rose 0.6 percent and home prices increased 0.3 percent, but neither report drew market reaction.
USDJPY traded firmer in a155.43-156.09 band as it recovered all of Friday’s losses. Higher Treasury yields triggered broad US dollar demand, although expectations for a Bank of Japan rate increase on December 19 may restrict further gains.
AUDUSD drifted in a 0.6538 to 0.6559 range and held firm on widening policy divergence expectations. The RBA may tighten sooner than anticipated while the Fed is easing.
