- Analysts downgrade odds for Fed rate hike in September
- US PPI data in focus
- US dollar opens mixed and little changed from yesterdays close.
USDCAD open: 1.3939, overnight range 1.3938-1.3958 close 1.3942, WTI 81.98, Gold 4,384.72
The Canadian dollar rallied following yesterday's US inflation report, then wasted little time recovering the ground it lost.
Negotiations between Ottawa and Washington are intensifying. According to the Globe and Mail, Canada may be willing to live with a 10-15% levy on automobiles in exchange for scrapping all of its counter-tariffs on American vehicles.
WTI oil stayed on the defensive inside 81.49-83.31. The IEA lowered its 2026 demand outlook by 1.6 million barrels per day, while OPEC trimmed its own projection by a more modest 510,000 b/d.
Overnight, scorching temperatures across Britain and continental Europe have handed traders in both regions a fresh reason to sit on their hands, and sit they did. In New York, the greenback is barely budging from where it finished yesterday. Wednesday's tame US inflation report trimmed expectations for a September rate hike, and today's producer price figures could cement that view.
Equity markets in Asia finished with no clear theme. Tokyo's Topix climbed 0.89%, Australia's ASX 200 slipped 0.23%, and Hong Kong's Hang Seng gave up 0.17%.
As of 7:20 am, the German DAX had is up 0.47% and the French CAC 40 was 0.19% while London's FTSE 100 fell 0.22%. S&P 500 futures are 0.17% higher, the US 10-year Treasury yield sits at 4.662%, and the DXY is at 99.89.
EURUSD is at the top of a 1.1511-1.1532 band ahead of today's US PPI and weekly jobless claims releases. Eurozone Industrial Production climbed 0.1% y/y, beating the -0.8% forecast and May's -0.1% reading, but markets shrugged it off. The single currency lacks conviction, and unless the US data delivers a meaningful surprise or Washington launches another strike on Iran, it should stay directionless into the close.
GBPUSD covered a 1.3474-1.3501 range, topping out during the Asian session, sagging through Europe, then clawing back its losses by the NY open ahead of the American data. Britain's second-quarter GDP expanded 0.4% q/q, down from 0.6%, while annual growth accelerated to 1.2% from 0.9%. June output beat forecasts with a 0.3% gain after a flat May, a bump analysts credit to the World Cup. Even so, softer than anticipated manufacturing and industrial production readings left an air of disappointment.
USDJPY bounced around inside 159.18-159.49, tumbling to the bottom of the band after Bloomberg revealed that Tokyo is open to a rate hike in the near future, driven by worry that yen weakness is fueling inflation. Japan's July PPI advanced 7.2% y/y, just under the 7.4% forecast and the prior 7.3% print. The pair crept back up as attention shifted to the upcoming US PPI numbers.
AUDUSD spent the session confined to 0.7044-0.7067 while awaiting a new catalyst. The RBA's modestly hawkish stance is providing a floor beneath the currency.
