- Global risk sentiment improves on rising Fed rate cut hopes
- WTI oil rises after Opec confirms unchanged production levels for Q1 2026
- US dollar trading defensively.
USDCAD open: 1.3984, overnight range 1.3965-1.3992, close 1.3979, WTI 59.44, Gold 4254.17
The Canadian dollar climbed due to broad US dollar selling pressure and the move was helped along by Canada’s Q3 GDP release on Friday. The headline gain looked upbeat at first glance, but the details took some of the shine off. The previous quarter was revised lower to minus 1.8 percent from minus 1.6 percent and export growth stalled.
WTI oil traded from 59.07 to 59.08 before sliding to 59.33 in early New York action. Prices found support after Opec confirmed that production quotas will stay unchanged for the first quarter of 2026.
American traders are back from their turkey, Black Friday, and football binge and stepped into a negative risk sentiment market. Stocks are softer and the greenback is retreating as traders react to hawkish noise from Japan, weak China PMI readings, and faint hopes that Washington’s talks with Moscow may produce a path toward ending the war in Ukraine.
The focus quickly shifts to today’s ISM PMI release and Wednesday’s ADP numbers even though a December Fed rate cut is nearly universally expected.
Asian equity indexes started the month with losses. Japan’s Topix fell 1.19%, Australia’s ASX 200 dropped 0.57% while the Hong Kong Hang Seng rose 0.67%.
As of 7:30 a.m., the German DAX is down 1.59%, the French CAC-40 has lost 0.89%, and the FTSE 100 index is flat. The S&P 500 is down 0.73%, the U.S. Dollar Index (DXY) is 99.18 and, the U.S. 10-year Treasury yield is 4.048%.
EURUSD traded in a 1.1590 to 1.1629 band and the single currency is getting a lift from speculation about a possible Russia and Ukraine ceasefire. Sellers emerged after German Manufacturing PMI fell to 48.2 from 49.6 and analysts pointed to U.S. buyers accelerating purchases ahead of tariff changes. The currency pair stays positive above 1.1550 and a break over 1.1670 sets the stage for a move toward 1.1760.
GBPUSD drifted in a 1.3205-1.3249 range supported by a stronger UK Manufacturing PMI that climbed to 50.2, the best reading in fourteen months. Economists suggest December could be even better now that the anxiety around the UK budget has faded.
USDJPY fell from 156.15 to 155.16 on fresh December rate hike speculation. Bank of Japan Governor Kazuo Ueda said officials were gathering information on corporate wage plans and said that uncertainty around U.S. tariffs and the American economy has eased. Analysts viewed the remarks as hawkish. Bond traders heard the message and drove the two year JGB yield to 1.02 percent, the highest level since 2008.
AUDUSD traded narrowly in a 0.6538-0.6558 band with support coming from expectations of a Fed rate cut and a belief that the RBA will lean slightly hawkish. Domestic inflation rising to 3.2 percent from 3.1 percent helped reinforce that view. Better global risk sentiment is lifting the currency as well.
