Fed Chair sounded hawkish in Friday’s Jackson Hole speech
- US and Iran renew missile strikes
- US opens little changed
USDCAD open: 1.3891 overnight range 1.3889-1.3912, close 1.3905, WTI 86.61, Gold 4,445.58
The Canadian dollar suffered Friday, after Fed Chair Kevin Warsh delivered “hawkish” remarks at Jackson Hole. He reiterated his commitment to the Fed’s 2.0% PCE inflation target and the FedWatch odds for a 25bps rate hike on September 16, rose from 36% to 62.9% today.
WTI rose from a $80.32 on Friday to $86.65 in NY today after the US and Iran renewed hostilities. The Americans attacked the Kharg Island oil terminal while Iran said they fired missiles and drones at American military bases in Jordan.
Treasury Secretary Bessent is presiding over the G-20 Finance Ministers meeting in North Carolina, Bessent barred reporters from the Wall Street Journal and Bloomberg from attending, two outlets that have been openly critical of his Tariff D-Day rollout and his bond buyback initiative.
He plans to use his podium time to push the rest of the Group of 20 to fall in line behind Washington, while pinning America's economic troubles on China and the previous administration.
Asian equities finished the session mixed. Japan's Topix rose 0.23% on the day and closed the month 3.85% higher, Australia's ASX 200 slipped 0.18% but still booked a 1.67% monthly gain, and Hong Kong's Hang Seng was little changed on the day, leaving it down 1.01% for the month.
As of 7:15 am, the UK FTSE 100 has gained 0.29%, the German DAX is down 0.71% and the French CAC-40 was little changed. S&P 500 futures are down 0.16%, the 10-year Treasury yield is 4.722%, and the DXY is 99.54.
EURUSD slipped into a 1.1578-1.1606 range on Friday as traders repriced the odds of a September 16 Fed rate hike higher in the wake of Fed Chair Warsh's Jackson Hole speech, a tightening bias other Fed officials echoed in their own remarks, while renewed fighting between Iran and the US and the resulting jump in crude prices added further pressure on the single currency; the short-term technical picture stays bullish as long as the pair holds above 1.1550.
GBPUSD held a 1.3529-1.3556 range in thin, holiday-affected dealing with UK markets shut for the Summer Bank Holiday, and sterling stayed on the back foot as renewed fears of a US rate hike, scaled-back expectations for further Bank of England tightening, and the ongoing US-Iran standoff all weighed on the currency.
USDJPY spanned a 159.48-160.20 range, rallying through the Asian session on the back of Warsh's Jackson Hole comments and touching the top of that band before intervention jitters from the Bank of Japan dragged price back down to the lows early in New York trading, with the 10-year JGB yield's climb to 2.93% also capping the advance as it lifted expectations for a faster pace of BoJ rate increases.
AUDUSD consolidated within a 0.7153-0.7171 range, holding a bearish tone as it digested Friday's losses, with a growing number of forecasters arguing the currency's recent rally had run too far and that the RBA may hold off on raising rates in the near term, particularly if the Iran-US conflict keeps weighing on demand for commodities.
The US and Canadian economic calendars are empty
