- China and US trade talks are ongoing in Madrid.
- Canadian parliament reopens.
- US dollar losing ground on outlook for dovish Fed.
USDCAD open 1.3831 overnight range 1.3821-1.3846, close, 1.3845, WTI 62.99, Gold 3641.24
The Canadian dollar moved back from the brink yesterday and traded sideways overnight. The Loonie is suffering because of a weak domestic economic outlook, rising unemployment and the trade war with the US but grinding higher on broad-based US dollar weakness.
Canada’s Parliament reopens in Ottawa after being shuttered since mid-June. However, a budget is not expected until October and new tariff-fighting spending plans are likely to increase the deficit, according to Prime Minister Carney
Crude prices climbed from 62.26 to 63.24 before easing to 62.79 in New York. Gains were fueled after Trump called on Europe to halt Russian oil purchases and promised additional heavy sanctions if NATO allies went along. Reports of Ukrainian drone strikes hitting Russia’s Krishi refinery added further support.
Another quiet Monday against the usual backdrop of Trump tweets and tariff talk. The President is talking up the chances of a “big cut” to interest rates this week, while about China/US trade negotiations in Madrid are garnering a lot of attention. Traders are also looking ahead to policy meetings from the Fed, Bank of Canada, Bank of England, and Bank of Japan. The greenback has been on the defensive against the G-10 but price action is stuck in well-established ranges.
Asian stocks ended the session mostly higher, although Australia’s ASX 200 slipped 0.13%. Japan’s Topix advanced 0.40% and Hong Kong’s Hang Seng managed a 0.22% gain.
By 7:20 am EDT, the French CAC 40 is up 1.15%, the DAX gained 0.41%, while the FTSE 100 is flat. US futures edged up 0.18%. Meanwhile, the US Dollar Index fell to 97.39 and the 10-year Treasury yield eased to 4.073%.
EURUSD traded a 1.1717-1.1751 band and is pressing against the top end despite Fitch cutting France’s credit rating to A+ from AA. Political turbulence and rising debt were blamed, but markets had priced in the move and brushed it off. Attention is firmly on Wednesday’s FOMC outcome.
GBPUSD rallied in a 1.3547-1.3600 range and is sitting at the peak in early NY trading. UK jobs numbers arrive Tuesday, inflation figures on Wednesday, and the Bank of England meets Thursday. Rates are expected to remain unchanged at 4.0%.
USDJPY slipped to the lower end of its 147.28-147.82 band as softer Treasury yields and broad dollar weakness weighed on prices. The Bank of Japan is widely expected to keep its settings steady at Friday’s meeting.
AUDUSD drifted between 0.6639 and 0.6667, benefiting from the softer dollar backdrop. The domestic calendar is quiet until Thursday, when employment and inflation data is released.
Today’s data includes Canadian Manufacturing Sales and Wholesale Sales and the New York Empire State Manufacturing Index.
