- US inflation numbers ahead.
- Equity sell-off fuels mild risk aversion.
- US dollar grinding higher in early NY trading.
USDCAD open: 1.3619, overnight range 1.3598-1.3638, close 1.3612, WTI 63.13, Gold 4948.88
The Canadian dollar consolidated yesterday’s losses as prices continue to track broad US dollar sentiment while ignoring domestic drivers. Prices are underpinned by softer commodity prices including gold and oil.
Canada could get a bit of tariff relief if the reports that Trump is weighing a partial rollback of tariffs on selected metals and aluminium ahead of the US mid-term elections are accurate.
WTI oil prices traded softer in a 62.15-63.27 range. Sellers emerged after Trump said he hopes to come to terms with Iran. This weeks increase in US crude inventories is another factor pushing prices lower.
US CPI data is forecast to rise 2.5% y/y, down from 2.7% in December, while the monthly pace is seen unchanged at 0.3% m/m. Core CPI is expected to ease to 2.5% from 2.6%. FX traders may take the numbers in stride, as the Federal Reserve remains more focused on labour market trends than on a single inflation print.
Asian equity markets finished lower. Japan’s Topix declined 1.63%, Australia’s ASX 200 fell 1.39%, and Hong Kong’s Hang Seng dropped 1.72%.
In Europe, the DAX and FTSE 100 are little changed, while France’s CAC 40 is off 0.33%. S&P 500 futures are down 0.24%. The US Dollar Index trades at 97.05, the 10-year Treasury yield is 4.104%, and gold (XAUUSD) is 4,964.21.
EURUSD traded in a 1.1847-1.1873 range, supported by firmer-than-expected Eurozone data. Q4 GDP rose 1.4% versus a 1.3% forecast, matching Q3 growth, while employment increased 0.2%, also unchanged from the prior quarter.
GBPUSD drifted in a 1.3590-1.3630 band as the domestic economic calendar offered little direction. Sterling continues to draw support from expectations of a more cautious Fed and lingering concerns about central bank independence should Kevin Warsh become Chair. Upside remains capped by prospects of additional Bank of England rate cuts.
USDJPY climbed in 152.66-153.67 range, though the pair is still set to post a weekly loss of roughly 2.2%. Bank of Japan board member Naoki Tamura indicated that the 2.0% inflation target is within reach, reinforcing expectations that policy tightening could resume.
AUDUSD retreated in a 0.7044-0.7098, range and is holding near the lower end of that band as safe-haven demand lifted the US dollar amid weaker global equities. Softer commodity prices added pressure, although the Reserve Bank of Australia’s relatively hawkish outlook limits deeper declines.
Canada and US markets are closed Monday, along with many Asian and Caribbean countries.
