- WTI oil prices slide as Middle East supplies increase
- US and Canada trade data due
- US dollar consolidating its recent gains.
USDCAD open (6:00 am): 1.4273 overnight range 1.4249-1.4285, close 1.4261, WTI $87.66, Gold $4,152.70.
The Canadian dollar is consolidating its recent losses and continues to be on the defensive due higher US Treasury yields. The Loonie scraped itself off the bottom after the 10-year eased from 5.33% overnight to 5.26% in early NY dealing.
The going-nowhere Canada-US trade talks, isn’t helping the Canadian dollar and Trump made it clear yesterday that he is in no hurry to restart them.
WTI has bounced around a $87.12-$90.04 range and is loitering just above the bottom of it in NY trading. According to Reuters, Middle East crude exports surpassed pre-war levels in the final week of September and reached more than 81% of pre-war volumes across the month as a whole.
Canada August merchandise trade balance and the Ivey PMI data are ahead.US trade deficit numbers are also due.
The US 10-year Treasury yield pushed up to 5.329% overnight, flirting yet again with territory it hasn't visited since 2002, as a worldwide rout in government bonds feeds on mounting fiscal worries and inflation that refuses to budge.
All of which keeps the US dollar on solid footing against EUR and GBP, helped along by a string of US releases showing an economy that simply refuses to roll over. Yesterday's ISM services index slipped a touch to 54.9 from 55.4 in August, but it remains comfortably in expansion territory.
Asian stocks closed in positive territory. Hong Kong's Hang Seng gained 1.00% to 24,280.56, Japan's Topix advanced 0.92% to 4,183.56 and Australia's ASX 200 added 0.57% to 8,735.68.
At 7:35 am, Germany's DAX is 0.75% higher, the UK FTSE 100 has climbed 0.45% and France's CAC 40 is up 0.63%. S&P 500 futures have gained 0.40%, the US 10-year Treasury yield sits at 5.26%, and the DXY is at 101.85.
EURUSD carved out a 1.1203-1.1248 range, sinking to its session trough in early Asian dealing courtesy of France's political and budget theatrics before clawing back most of the damage by the NY open. ECB Chief Economist Philip Lane struck a decidedly dovish note, saying he hasn't seen pricier energy "generating second-round inflation," while German and Eurozone data offered little cheer. German factory orders slumped 10.6% after a 3.2% gain in July, and Eurozone Retail Sales grew 0.8% y/y, short of the 1.0% forecast.
GBPUSD edged higher within a 1.3201-1.3248 range. A stronger-than-forecast Services PMI yesterday and today's Construction PMI beat (46.1 against a 45.4 forecast and 44.3 in August) are lending sterling a modest lift. The numbers have also pushed the odds of a 25 bp BoE rate hike on November 5 above 60%.
USDJPY chopped around a 157.77-158.25 range, hitting its high after the 10-year JGB auction, where the coupon was lifted to 3.1%, the loftiest in roughly three decades.
AUDUSD held steady in a tight 0.6962-0.6980 range, with a modestly bullish tilt as RBA rate hike chatter lingers. Policymakers remain anxious about sticky inflation fuelled by the service sector and a tight labour market. Aussie consumers, meanwhile, are in no mood to celebrate, with the consumer sentiment survey showing confidence sliding 4.7% to 80.4 in October, its weakest reading since early April.
