- Trump announces launch of “Massive” Japan investment
- FOMC minutes due this afternoon.
- US dollar trading sideways but with modest bid
USDCAD open: 1.3656, overnight range 1.3632.-1.3668, close 1.3638, WTI 63.00, Gold 4914.88
The Canadian dollar shrugged off yesterday’s soft inflation report. Headline CPI was 0% month over month versus a 0.1 % forecast, while core CPI rose 2.3 % compared with expectations for 2.4 %. The results were consistent with Bank of Canada projections and are unlikely to alter the current policy stance.
Prime Minister Mark Carney unveiled Canada’s new defence strategy, saying it positions domestic industry to benefit from $180 billion in defence procurement opportunities and $290 billion in related capital investment over the next decade, with an estimated 125 billion dollars in downstream economic benefits by 2035.
WTI traded in a 62.12 to 63.99 range and recouped yesterday’s losses, sitting near the session high in early NY trading. The rebound reflects fresh media reports suggesting a US attack on Iran is imminent, raising concerns about potential supply disruptions if shipments through the Strait of Hormuz are affected.
The US dollar is marginally higher in early NY trading following another subdued overnight session. Markets will sift through the FOMC minutes from the January 28 meeting for guidance on the path of US interest rates.
Asian equity markets were subdued due to extended holidays. Japan’s Topix rose 1.21 % and Australia’s ASX 200 gained 0.54 %, while Chinese markets were closed.
As of 7:20 am, European bourses are higher. The FTSE 100 is up 1.0 %, the DAX has gained 0.94 %, and the CAC 40 is ahead by 0.53 %. S&P 500 futures are up 0.52 %. The US Dollar Index is 97.24, the 10-year Treasury yield is 4.071 %, and gold has rallied from 4,853.86 to 4,926.91.
EURUSD traded in a 1.1829 to 1.1858 range and is sitting near the session low in early NY trading. Reports suggest ECB President Christine Lagarde may step down before her term ends added a layer of political uncertainty to the euro.
GBPUSD traded in a 1.3550 to 1.3583 range and lacked clear direction despite fresh inflation data. UK CPI rose 3.0 % year over year in January, matching expectations but easing from 3.4 % in December. Producer prices were mixed and retail sales undershot forecasts at 3.8 % year over year versus 3.9 % expected and 4.2 % previously. Even so, the Bank of England is still widely expected to cut rates next month.
USDJPY traded in a 153.07 to 153.86 range and strengthened after a social media post from the US president touted a massive trade deal with Japan tied to a 550 billion dollar investment commitment.
AUDUSD traded in a 0.7064 to 0.7088 range in thin conditions due to Asian holidays. AUDNZD demand boosted prices after the Reserve Bank of New Zealand left rates unchanged at 2.25 % and delivered a relatively tame statement.
Today’s US data includes December Durable Goods Orders, Building Permits, Housing Starts, and Capacity Utilization.
