- Canada gets a new budget today
- Risk aversion rises on stock market warnings.
- US dollar in demand across the board, except against JPY
USDCAD open: 1.4058, overnight range 1.4054-1.4084, close, 1.4057, WTI 61.017, Gold 3996.27
The Canadian dollar is sinking under the weight of broad-based US dollar demand alongside ongoing concerns about rising recession risks in Canada. Prime Minister Mark Carney’s government unveils their latest budget which is expected to double the deficit.
Oil prices traded in a 59.96-61.02 band are under pressure due to risk aversion and ongoing concerns about an oil glut in Q 1 2026.
The US dollar regained its footing overnight, with the US dollar index touching 100.10 as traders sought safety in greenbacks during a wave of risk aversion. Sentiment soured after the CEOs of Goldman Sachs and Morgan Stanley warned investors to brace for a potential 10–15% correction in equity markets within the next two years.
Political nerves in Washington added fuel to the move. The Trump administration faces a crucial day at the US Supreme Court, which will hear arguments on the legality of existing tariffs. Treasury Secretary Bessent called the hearing a matter of national security and hinted that alternative legal frameworks might be used to preserve the tariff regime if the ruling goes against them.
Meanwhile, the US government shutdown has tied the record for the longest in American history, a milestone also set under a previous Trump administration. While lower-income families relying on food assistance face hardship, members of Congress continue to collect their pay without disruption.
New York City voters head to the polls today to choose a new mayor, with a 34-year-old socialist candidate currently leading the race.
Asian equity markets were in the red, with Hong Kong’s Hang Seng losing 0.79%, Japan’s Topix down 0.65%, and Australia’s ASX 200 slipping 0.91%.
As of 8:30 am, European bourses followed suit, with the German DAX off 1.17%, the French CAC 40 down 1.02%, and the UK FTSE 100 falling 0.41%. S&P 500 futures dropped 1.08%, while the US 10-year Treasury yield sits at 4.097%. Gold is holding near 1978.36, and the US dollar index is at 100.07.
EURUSD traded in a 1.1477–1.1534 band, sliding toward session lows as traders reacted to a hawkish tilt from the Federal Reserve that stands in contrast to the European Central Bank’s more neutral tone. Renewed risk aversion tied to the tariff case and equity market warnings weighed further on sentiment, while political instability in France added to the downside pressure.
GBPUSD fell within a 1.3053–1.3146 range as UK fiscal uncertainty and broad US dollar strength kept buyers sidelined. Chancellor Reeves latest remarks were viewed as confirmation that higher income taxes are on the table in the upcoming budget.
USDJPY slipped between 153.32 and 154.48 as global equity weakness drove flows into traditional safe-haven currencies. Verbal intervention from Japanese officials warning against “one-sided” moves was another factor.
AUDUSD drifted lower in a 0.6491–0.6541 range, undermined by risk-off sentiment and stronger US dollar demand. The Reserve Bank of Australia kept its benchmark rate at 3.60% but struck a hawkish tone, raising inflation forecasts and noting that “less easing may be required” to bring prices to target.
