- Oil prices are free-falling.
- Markets are looking for fresh guidance from Fed chair Powell today.
- US dollar opens higher compared to close after subdued overnight session.
USDCAD: open 1.3778-82, overnight range 1.3755-1.3793, close 1.3767, WTI $76.81, Gold, $1961.99.
The Canadian dollar is getting pummeled by the combined forces of hawkish Fed speak and free-falling oil prices. It's not alone, as falling commodity prices are also weighing on the Australian and New Zealand dollars.
West Texas Intermediate (WTI) extended its overnight losses in early NY trading and dropped to $76.23/b before pausing. WTI has lost over 18% since prices peaked in the wake of the Hamas attack on Israeli women, children, and babies. Traders are concerned about US interest rates remaining elevated for a prolonged period, which may choke off a global recovery. Those fears were exacerbated yesterday when China’s trade data revealed a steep drop in imports. In addition, the American Petroleum Institute (API) reported that US crude inventories surged by 11 million barrels in the week ending November 3.
The drop in oil prices was just one reason for the Canadian dollar's weakness. Comments from Federal Reserve representatives have been dominating the conversation due to a significant lack of substantial US economic indicators. In recent statements, officials such as Austan Goolsbee, Michelle Bowman, Neel Kashkari, Christopher Waller, John Williams, and Lorie Logan shared their perspectives on the potential need for an increase in US interest rates, or the necessity to maintain them at their present rate for an extended duration.
Further insights from the Federal Reserve are slated for today, with Jerome Powell, the Chair of the Fed, scheduled to give the introductory speech at the Division of Research and Statistics' 100th Anniversary Conference in Washington, D.C. Accompanying Powell in today's roster of speakers are John Williams, President of the New York Fed, and Federal Reserve Governor Philip Jefferson.
EURUSD traded in a 1.0659-1.0703 range. German inflation data was as expected, but Eurozone Retail Sales (September actual -0.3% m/m; forecast -0.2%) were below the consensus forecast, which was viewed as a EURUSD negative.
GBPUSD chopped around in a 1.2242-1.2308 range as divergent Fed and Bank of England interest rate outlooks pressured the currency.
USDJPY ranged in a 150.34-150.80 band as firm US 10-year Treasury yields and broad US dollar demand supported prices.
AUDUSD drifted in a 0.6420-0.6450 band as traders continued to assess the RBA’s interest rate outlook.
There are no top-tier US economic reports today.
