- Fed outlook gives US dollar a bid.
- Oil prices trading softer on hopes for a US/Iran deal
- US dollar is trading higher across the board.
USDCAD open: 1.4085, overnight range 1.4057-1.4092, close 1.4067, WTI $90.03, Gold $4,314.57
The Canadian dollar is weighed down by broad U.S. dollar strength against the major currencies combined with steady-to-wider CAD/US interest-rate differentials. The 2-year spread widened to -150.9 from -148.4 yesterday.
The Australian and Canadian dollars have reached parity for the first time in eight years, a milestone that highlights the Loonie’s relative weakness. The RBA is perceived as having a firmer policy stance than the BoC, while Canada is dealing with a softer growth outlook and continuing trade tensions with the United States. Those factors leave the Canadian dollar
particularly exposed when sentiment toward commodity currencies deteriorates.
WTI traded between $88.72 and $90.50 as expectations of a diplomatic breakthrough between Washington and Tehran reduced the perceived risk to oil supplies. The prospect of renewed Iranian exports provided an additional reason for traders to sell crude, while reports that Saudi Arabia’s East-West pipeline is gradually restoring capacity added to the bearish tone
Asian equity markets finished mostly lower, with Hong Kong’s Hang Seng falling 1.01%, while Japan’s Topix and Australia’s ASX 200 ended little changed.
As of 7:40 am, European equity markets are in negative territory led by the German DAX which is down 0.73%. The French CAC-40 has lost 0.28% and the UK FTSE 100 is down 0.15%. S&P 500 futures are down 0.11%, the 10-year Treasury yield is 4.981%, and the DXY is 100.88.
EURUSD is on the defensive in a 1.1406-1.1456 range as widening Eurozone/U.S. interest-rate differentials continue to favour the greenback. The euro remained under pressure even after Eurozone composite PMI jumped to 53.1 from 52.0, comfortably beating the 51.5 forecast. The result was particularly notable given supply-chain disruptions and elevated oil prices. German Manufacturing PMI was less encouraging, falling to 53.8 from August levels
GBPUSD traded lower in a 1.3277-1.3352 band. Sterling is weighed down by widening Gilt/U.S. Treasury spreads and a weaker Services PMI reading. September’s index came in at 51.7 versus expectations of 52.0 and August’s 52.5. S&P Global Chief Business Economist Chris Williamson described the combination of sluggish growth and mounting inflation pressures as worrying.
USDJPY rose in a 157.34-157.97 range. The move came despite softer oil prices, as investors continue to question the Bank of Japan’s willingness to raise interest rates again. Japanese markets remained closed.
AUDUSD traded lower in a 0.7066-0.7122 band, with the Australian dollar under pressure following weaker-than-expected PMI data. Manufacturing PMI fell to 49.3 from 52.0 in August, while Composite and Services PMI slowed.
S&P Global PMI data for the US is ahead.
