- Tame US PCE knocks US dollar lower
- Oil prices retreat despite Iran attack on Taiwan ship
- US dollar opens lower against the majors.
USDCAD open: 1.4185, overnight range 1.4181-1.4210, close 1.4203, WTI 69.00, Gold 4,047.61
The Canadian dollar rallied after Thursday’s US PCE Price index was little changed which suggest the Fed does not have any need to raise interest rates in the near term. The news sent US Treasury yields lower which narrowed both the CAD/US 2 year and 10-year interest rate spreads, in Canada’s favour.
WTI oil prices brushed off a wave of nerves after an Iranian drone struck a ship in the Strait of Hormuz. Crude dropped from yesterdays high of 72.51 to 69.58 today.
Currency desks were fixated on sliding US Treasury yields after yesterday's PCE Price Index came in tame and falling Treasury yields more than offset angst of the global stock market sell-off.
Asian equities finished deep in the red, the lone exception being Australia's ASX 200, which nudged up 0.18%. Japan's Topix shed 1.32% and Hong Kong's Hang Seng dropped 1.78%.
By 7:40 am, Germany's DAX had lost 1.21%, France's CAC 40 was down 0.81%, and the UK FTSE 100 was down 0.82%. S&P 500 futures have lost 0.50%, the 10-year Treasury yield is 4.4378%, and the DXY is 101.24.
EURUSD climbed in a 1.1354-1.1412 range, buoyed by softer oil and the broad wave of dollar selling. With no top-tier data on the Eurozone docket, traders mostly concentrated on keeping cool as a heat wave bore down on the continent.
GBPUSD hovered near the top of its 1.3180-1.3228 band in subdued trade. The pound is still weighed down by fading odds of a BoE hike and a fresh bout of political uncertainty.
USDJPY held firm in a 161.54-161.85 range even as intervention risk mounts. Tokyo CPI excluding food and energy rose 1.9% y/y in June against 1.6% in May, while the headline reading leapt to 1.7% from 1.4%.
AUDUSD drifted in a 0.6876-0.6918 range, shadowing the broad dollar and ending a touch firmer overnight. The Aussie stays on the back foot after this week's softer inflation print trimmed the case for more RBA tightening, and Westpac economists floated the possibility that the domestic economy contracted in June.
The only data of note is US Michigan Consumer Sentiment.
