- Oil surges as hopes for Strait of Hormuz reopening fade.
- Quiet data day to start the week
- USD nursing Friday’s losses after quiet overnight session.
USDCAD open: 1.3933, overnight range 1.3928-1.3946. close 1.3946, WTI 84.15, Gold 4,372.88
The Canadian dollar traded without much direction as traders remained on the sidelines ahead of tomorrow’s US CPI report. With little in the way of market-moving economic data from either Canada or the US today, there is not much incentive to take fresh positions.
USDCAD upside remains constrained by the narrowing Canada-US interest rate differential and signs of renewed CAD demand as speculative short positions are unwound.
WTI climbed 1.9% overnight to 84.61 before retreating to 83.31 in New York. Hopes of a reopening of the Strait of Hormuz have faded as Trump and Iran continue to demand compensation from each other, making a quick resolution increasingly difficult to see.
Asian equities were mixed overnight. Japan's Topix advanced 0.62%, Australia's ASX 200 edged up 0.19%, while Hong Kong's Hang Seng slid 1.10%.
As of 7:30 am, the Germany's Dax, the UK FTSE 100 and CAC 40 are flat while S&P 500 futures are up a modest 0.15%. The 10-year Treasury yield sits at 4.709%,and the DXY is at 99.82.
EURUSD was directionless in a 1.1531-1.1550 band, The lack of interest may be blamed on the heatwave gripping the Eurozone or the summer exodus of traders and central bankers, but volumes are thin either way. With no market-moving data on the docket, the pair sits modestly supported above 1.1500.
GBPUSD traded in a 1.3490-1.3516 band with traders’ content to await Wednesday’s US inflation data. Traders ignored news that BRC like-for-like retail sales climbed 1.0% in July, undershooting both the 1.5% forecast and June's 1.7% pace. A Barclays Bank survey that showed consumer confidence rose to a two-year high did not spark any interest either.
USDJPY inched higher in a 158.93-159.39 range, with traders unconvinced by talk that the BoJ could accelerate its tightening timeline later this year. Firmer crude prices, a stronger US yield backdrop and the assumption that intervention remains a distant threat until levels climb further, are all lending support.
AUDUSD chopped around inside a 0.7039-0.7063 range after the RBA rates at 4.35%. Prices saw some supported after Governor Bullock warned that further hikes remain "quite possible" and also because the timeline for inflation returning to target was pushed out.
