- Iran resumes attacks on neighbors and shipping
- Oil prices jump 4.6% before easing a tad
- USD opens modestly lower after quiet overnight session.
USDCAD open: 1.4104, overnight range 1.4085-1.4110, close 1.4108, WTI 82.20, Gold 4,032.83
The Canadian dollar chopped sideways in a session marked more by inertia than conviction, as traders held back ahead of this afternoon's FOMC decision. Iran's renewed strikes on shipping and its neighbours barely registered on the pair, though the resulting jump in crude prices did act as a modest drag on the loonie's upside.
The Bank of Canada ‘s Summary of Deliberations is on tap bit it will be overshadowed by the FOMC decision.
WTI oil surged from 79.13 yesterday to 83.33 this morning after Iran attacked three vessels in the Strait of Hormuz, forcing them to alter course, while also launching missiles and drones at Saudi oilfields and at Jordan. All projectiles were reportedly intercepted. Reuters reports Iran is due to receive 400 Chinese-made shoulder-launched air defence systems within weeks. The renewed attacks pushed WTI to $83.28 overnight.
The FOMC rate decision is a 2:00 pm. Warsh has made no secret of his distaste for forward guidance, having argued that Fed officials talk too much, so markets shouldn't expect a detailed walkthrough of the committee's reasoning regardless of the outcome. Any hint about September is even less likely.
US consumer confidence slipped 1.4 points to 90.8 in July, down from an upwardly revised 92.2 the prior month. The present situation component weakened for a third straight month, dropping 3.6 points to 114.9.
Asian markets closed higher across the board. Japan's Topix added 0.26%, Hong Kong's Hang Seng jumped 1.96% and Australia's ASX 200 rose 1.02%.
As of 7:10 am, European trade the UK FTSE 100 is up 0.18%, the German Dax is unchanged, and the French CAC 40 has lost 0.67%. S&P 500 futures are up 0.21%, the 10-year Treasury yield is 4.631%,and the DXY is at 101.40.
EURUSD firmed modestly in a 1.1382-1.1404 range. Volume has been thin with the eurozone economic calendar bare encouraging traders to wait out the Fed announcement. A dovish tilt from Warsh could carry the pair toward 1.1450, while a hawkish surprise would put 1.1320 back in view.
GBPUSD spent the session grinding sideways in a 1.3281-1.3309 band as traders braced for back-to-back central bank decisions, the Fed today and the Bank of England tomorrow. Yesterday’s UK shop price inflation data reinforced the case for the BoE to stay put.
USDJPY traded quietly in a 163.28-163.88 range with little conviction ahead of the Fed although the downside was supported by firmer US Treasury yields. The earthquake in the Kumamoto region that has killed at least 18 people and Fridays pending BoJ meeting added more incentive for traders to remain on the sidelines
AUDUSD traded lower in a 0.6938-0.6981band after inflation data undershot forecasts. Headline CPI cooled to 3.8% y/y from 4.0% which was enough to further deflate already modest expectations for an RBA rate hike.
