- Trump’s talks about naming successor to Powell, early.
- The wait until the US data dump keeping traders on the sideline
- US dollar opens with losses across the board.
USDCAD open 1.3653, overnight range 1.3628-1.3663, close 1.3740, WTI 65.71, Gold 3283.79
The Canadian dollar is hanging on to yesterdays gains ahead of key US data this morning. The Fed favourite Personal Consumption Expenditures-Price index is expected to show a 0.1% m/m gain, which is unchanged from the previous month. A hotter than expected result will support Fed Chair Powell’s wait and see approach to interest rates, while a lower number will inflame the rate cut debate.
Canadian dollar trading is sure to get choppy into the 10:00 am option expiry window. There are reportedly $2.8 billion of USDCAD strikes in the 1.3630-50 area that roll off today.
Commerce Secretary Howard Lutnik declared the U.S. and China had reached a trade “understanding” that would see rare-earth minerals flow to America in exchange for rolling back some U.S. countermeasures. The news was greeted cautiously but global risk sentiment improved.
Oil prices are stuck in neutral, with WTI drifting between $65.32 and $65.93. A de-escalation in the Middle East has eased supply fears, and reports that the U.S. won’t refill its Strategic Petroleum Reserve for another seven months have added downside pressure.
EURUSD drifted in a 1.1681–1.1727 band overnight. Markets largely dismissed softer Eurozone sentiment and industrial confidence data and focused instead on the improving U.S.-China tone. Traders are also fading the U.S. dollar on speculation that the Fed’s independence is under threat. There’s also buzz about EU efforts to placate Trump and avoid a steep tariff hike to 50%.
GBPUSD is steady in a 1.3716 and 1.3750 range , holding onto yesterday’s gains. Risk appetite is bolstered by chatter around a U.S.-China trade accord and mounting expectations for an earlier-than-expected Fed rate cut.
USDJPY remained inside a 144.18–144.81 corridor. Tokyo’s June CPI cooled to 3.1% from 3.4%, with core inflation also dipping. The decline stemmed from a temporary drop in electricity costs, but inflation levels remain well above the Bank of Japan’s 2% target, suggesting rate hikes could still be on the table.
AUDUSD bounced between 0.6540 and 0.6562 in overnight action. Risk sentiment was weighed down by Iran’s denial of any plan to engage with U.S. officials.
