- Canadian economy is expected to have grown 0.3% m/m in April.
- Canadian markets are closed on Monday.
- US dollar opens mixed after choppy overnight session
USDCAD: open 1.3695, overnight range 1.3693-1.3735, close 1.3701, WTI $82.56, Gold, $2330.35
The Canadian dollar opened close to unchanged after a choppy overnight session due to a mix of US presidential politics and caution ahead of today’s key US inflation numbers.
The Canadian dollar sank rapidly during and in the aftermath of the President Biden and Donald Trump debate. CNN reported that Mr. Trump was the hands-down victor with 67% of people polled saying he won. President Biden struggled and at times looked dazed and confused.
The Wall Street Journal reports that some Democrats were so dismayed by Mr. Biden’s performance they are holding private discussions about replacing him. Mr. Trump appeared to be in control of his faculties, and he was at his bombastic best, spouting facts, figures, and opinions, although many of his remarks had no basis in reality.
Global markets reacted to the debate as if another Trump presidency was assured. The US dollar rallied across the board, but most of those gains have been reversed by the NY open.
The Canadian dollar may get a boost when GDP data is released. Statistics Canada estimated that the Canadian economy would grow 0.3% m/m in April, compared to 0% in March. If so, it would suggest that the BoC may take more time before cutting rates. However, a weaker than expected result would raise the odds for a July rate cut which would knock the Loonie lower.
US inflation is in the spotlight. The US Core Personal Consumption Expenditures Price Index is expected to have risen 0.1% m/m in May, a tick below the 0.2% in April, and 2.6% y/y compared to 2.8% y/y in April. The Fed pays close attention to this data, so markets are fixated on it. Lower than expected results will spark a flurry of Fed rate cut bets and raise the odds for a September move. The US dollar will plunge, and bond yields will fall. Of course, the opposite will occur after a higher than expected result.
EURUSD traded in a 1.0684-1.0711 band with traders very cautious ahead of the French election on Sunday.
GBPUSD traded in a 1.2622-1.2659 range with prices supported by better than expected GDP data. (actual 0.7% q/q vs. forecast 0.6%).
USDJPY rallied then sank in a 160.43-161.28 range. Prices were roiled by a mix of data, US presidential politics, and an internal Japanese Finance Ministry job shuffle. Tokyo inflation rose 2.1% y/y in June compared to 1.9% in May. Japan’s Ministry of Finance replaced its top FX official Masato Kanda with Atsushi Mimura.
Canadian markets are closed Monday.
AUDUSD is at the top of its overnight 0.6619-0.6662 range due to broad US dollar weakness ahead of the US data
