- Canada expected to recoup last months job losses.
- US/UK trade announcement is no deal, merely hyperbole
- US dollar opening with gains compared to the close but lower than yesterday.
USDCAD: open 1.3884, overnight range 1.3813-1.3890, close 1.3841, WTI 61.06, Gold 3325.08
The Canadian dollar extended its post-FOMC losses after a downbeat Financial Stability review from Bank of Canada Governor Tiff Macklem and broad US dollar demand following a UK/US trade announcement.
The Canadian dollar suffered after BoC Governor Tiff Macklem warned that an extended trade war posed a serious threat to Canada’s economy and financial system. He called it the single biggest risk on both fronts.
WTI is ending the weeks sharply higher from Monday’s low of $55.39 with prices climbing to $61.19 in early New York trading. Hopes that China and US will lower the trade tensions at this weekend’s meeting in Switzerland are underpinning prices.
Canada is expected to post a modest job gain of 2,500 in April, following a 32,600 loss in March. But the numbers will be skewed by temporary election-related hiring. The unemployment rate is forecast to tick up to 6.8% from 6.7%.
Asia traders’ optimism about China/US trade talks was reflected in equities. Australia’s ASX closed 0.46% higher while Japan’s Topix rose 0.29%. European bourses are modestly higher, and the S&P 500 futures are flat. The 10-year Treasury yield climbed to 4.38% today from 4.28% yesterday.
EURUSD traded in a 1.1197–1.1260 range and remains under pressure after Powell’s “wait-and-see” messaging and misplaced confidence in global trade talks. Some ECB policymakers hinted at additional rate cuts, and yesterday’s dip below 1.1250 has opened the door to further losses toward 1.1200 and potentially 1.1100.
GBPUSD ranged between 1.3212 and 1.3279. Traders digested a mildly hawkish BoE result, including a vote split that featured Chief Economist Huw Pill. That outcome reinforced expectations for only two more cuts this year. The UK/US trade news, largely expected, barely registered.
USDJPY moved in a 145.08–146.19 band. The pair drifted lower after hitting the overnight peak, with profit-taking ahead of the weekend. Hopes for a trade thaw between the US and China, along with mixed Japanese data, kept BoJ tightening risks on the radar.
AUDUSD traded in a 0.6371–0.6415 band. The Aussie is bouncing back as sentiment stabilizes post-FOMC and as markets look ahead to this weekend’s China/US trade meeting. Optimism that tensions might ease is providing modest support.
Many FOMC policymakers will discuss Wednesday’s decision to leave rates unchanged including, Governor Adriana Kugler, New York Fed President John Williams, Chicago Fed President Austan Goolsbee, and Governor Christopher Waller.
