- Risk sentiment turns positive
- Reports that US and Iran may agree to a 60-day ceasefire
- USD opened close to flat ahead of ADP employment data today
USDCAD open: 1.4065, overnight range 1.4063-1.4080. close 1.4062, WTI 76.54, Gold 4,157.19
The Canadian dollar drifted in a tight overnight range, pressured by lower oil prices and widening CAD/US interest rate spreads that favoured buying U.S. dollars.
Risk sentiment improved across global markets after Wall Street surged yesterday, powered by strong technology earnings and renewed optimism that the U.S. and Iran are edging toward another ceasefire agreement. Axios reported Washington is seeking a temporary arrangement that would route inbound Gulf traffic through Iranian waters and outbound traffic through Omani waters for 60 days, helping WTI retreat into a 74.23-76.40 range.
Canada-U.S. trade talks are also gaining momentum. The Globe and Mail reports Ottawa may be willing to cap metal exports in exchange for reducing the current 50% tariff. Washington is also pressing for greater access to Canada's dairy market and the removal of provincial restrictions on alcohol imports in eight of the country's ten provinces.
Meanwhile, yesterday's JOLTS report and factory orders data pointed to a modest cooling in the U.S. economy, giving Fed doves more evidence to support the case for lower interest rates.
Asian equities followed Wall Street higher. Japan's Topix rose 2.13%, Australia's ASX 200 gained 0.90%, and Hong Kong's Hang Seng added 0.24%.
As of 7:20 a.m. EDT, Germany's DAX and France's CAC-40 are little changed, while the UK's FTSE 100 is down 0.33%. S&P 500 futures are up 0.41%, the 10-year Treasury yield is 4.611%, and the U.S. dollar index (DXY) is 99.73.
EURUSD is traded quietly in a 1.1527-1.1547 range despite firmer Eurozone figures and softer energy prices. Final July Services PMI was revised up to 51.7, confirming the bloc has returned to expansion, and cooler producer prices hinted at easing inflation pressure.
GBPUSD inched higher in a 1.3444-1.3470 band. Sterling got a minor boost from higher than expected July Services PMI, which rose to 52.1 from June's 48.8 but the real catalyst was improved global risk sentiment.
USDJPY has edged higher in a 157.31-157.88 range. The gains show that the impact of the joint Japan-US FX intervention is fading. The BoJ minutes were hawkish sounding, as expected, but barely registered with traders.
AUDUSD is trading with a firmer tone in a 0.7040-0.7056 range. The Aussie caught a bid from broad dollar weakness and a wider risk-on mood tied to hopes for a US-Iran breakthrough. Stronger Australian PMI figures, with the composite reading at 53.2 against a forecast of 52.6 supported prices.
