- Optimism rebounds with US tech stock Micron’s outlook
- Oil prices are back to pre-US/Iran war levels
- US dollar steady and consolidating gains.
USDCAD open: 1.4234, overnight range 1.4223-1.4244, close 1.4233, WTI 69.61, Gold 3,988.52
The Canadian dollar drifted overnight as traders stayed on the sidelines ahead of today's pivotal US inflation data.
A hotter-than-forecast Core PCE Price Index, paired with renewed enthusiasm for US AI and other tech names, could re-ignite US dollar demand and sink the Loonie further.
Yesterday's Bank of Canada Summary of Deliberations reaffirmed what amounts to a coin toss, with policymakers seeing a path to higher rates and an equally plausible path to lower ones.
WTI oil prices traded in a 68.91-70.21 range and sit mid-band in New York. Crude has sunk back to where it sat before the Iran-US war, now that tankers are moving through the Strait of Hormuz again.
US Core PCE-Price Index is forecast to rise to 0.3% m/m from April's 0.2% and to 3.4% y/y from 3.3%. A hot print keeps the dollar bid on hike bets, while a soft one hands the market room to consolidate.
The rest of the US slate brings weekly jobless claims (forecast 225,000 against last week's 226,000), Q1 GDP (forecast 3.5%), and May durable goods orders ex-transportation.
Asia equity indexes were mixed. Japan's Topix climbed 1.33%, Australia's ASX 200 sank 0.68% and Hong Kong's Hang Seng dropped 1.43%.
By 7:30 am, Germany's DAX has risen 0.63%, France's CAC 40 has gained 0.55%, and Britain's FTSE 100 is up 0.46%. S&P 500 futures are up 0.62%, the 10-year Treasury yield was 4.41%, and the DXY is 101.70.
EURUSD held a tight 1.1345-1.1374 band as traders marked time before the morning data deluge and risk appetite picked up. US chip company, Micron Technology, guided quarterly sales well above Wall Street's forecast, putting AI and tech optimism back in the spotlight. The bigger draw, though, is the US data and the hope they sharpen the rate picture.
GBPUSD edged up in a 1.3158-1.3198 range in a subdued session ahead of the US releases. Britain's leadership scramble and the gap between Bank of England and Fed policy continue to cap the pound.
USDJPY pushed its rally further in a 161.57-161.90 band, with the only whiff of intervention the customary BoJ refrain that officials stand ready to act as needed. Board member Naoki Tamura again pressed for a faster pace of hikes. The US-Japan yield gap is what is driving the pair, and intervention cannot paper over that.
AUDUSD drifted in a 0.6887-0.6908 range, brushing aside a jobs report that beat with 40,300 new positions in May, since that merely clawed back April's losses. The market was more fixed on the chance that firmer US inflation builds the case for a September Fed hike
