- Oil prices slide on hopes for a diplomatic solution to US and Iran war.
- RBA hikes rates and AUDUSD falls
- US dollar trading on a mixed note
USDCAD open (6:00 am): 1.3960, overnight range 1.3958-1.3997, close 1.3986, WTI $97.54, Gold $3,906.29.
The Canadian dollar wandered in a sleepy overnight session, and nothing on today’s calendar is going to wake it up. Every eye is on the circus Americans call the midterm elections, with control of Congress up for grabs. The mainstream press is certain the Democrats will take it. The same crowd was every bit as certain in 2016 that Hillary Clinton would be the 45th president.
Governor Macklem appears before Parliament at 11:00 am to explain his rate hike decision.
WTI slid into a $96.12-$98.67 range overnight after Iran’s Supreme Leader ordered officials to negotiate a settlement, lifting hopes that US-Iran hostilities might wind down. Crude climbed off its low when a US fighter fired on an Iranian missile launcher on Qeshm Island.
South of the border, traders get September JOLTS job openings (forecast 7.164 million versus 7.079 million previously) and factory orders, which are expected to rise 1.2%.
Asia equity indexes closed higher. Hong Kong’s Hang Seng added 0.57% and Australia’s ASX 200 climbed 0.34%, while Japanese markets were on holiday.
As of as of 7:30 am, European indexes are under water with the German DAX and the UK FTSE 100 are down 0.64% while the French CAC-40 fell 0.24%. S&P 500 futures flat. The US 10-year yield sits at 4.926% and the DXY is at 101.83.
EURUSD chopped around a 1.1149-1.1237 range as the euro sat on its recent gains in a listless market. With no meaningful data to trade and nerves jangling ahead of the US vote, most traders stayed on the bench. The pair did pick up a modest lift from falling oil prices, courtesy of renewed hope for a diplomatic end to the US-Iran war.
GBPUSD edged higher within a tight 1.3396-1.3426 band ahead of the US political theatre and Thursday’s Bank of England decision. Sticky inflation is expected to push the BoE to lift its benchmark rate by 25 bps to 4.00%.
USDJPY is pressing against the top of its 157.75-158.30 range in NY, apparently shrugging off yesterday’s reminder from Finance Minister Satsuki Katayama that joint US-Japan FX intervention remains on the table. Wide US-Japan yield spreads are keeping the pair propped up, although sliding oil could take some of the steam out of the rally. Japanese markets were shut for a holiday.
AUDUSD slipped in a 0.6962-0.7005 range after the RBA delivered the expected 25bp hike to 4.85%, the highest cash rate since 2008. The decision was far from unanimous, with three members preferring to stand pat in a 6-3 split. Traders read Governor Bullock’s remarks as dovish because she dropped no hint of further tightening, and the Aussie fell.
Today’s US data include JOLTS job openings for September (forecast 7.164 million, previous 7.079 million), and factory orders (forecast +1.2%).
