- EURUSD reaches parity-briefly
- US inflation outlook elevates negative risk sentiment
- US dollar in demand as a safe-haven currency
USDCAD Snapshot open 1.3029-33, overnight range 1.2994-1.3049, close 1.3005, WTI oil $101.55, Gold $1735.25
The Canadian dollar drifted lower throughout the overnight session, along with the rest of the G-10 major currencies.
There were few top-tier economic reports in any region, leaving traders to fret about Wednesday's US inflation report and global growth.
Traders fear that the Russian war with Ukraine, new coronavirus outbreaks in China, and rising inflation will derail global growth. They also feared higher than expected US inflation (forecast 8.9% y/y ) after the White House put some spin on the upcoming release.
Press Secretary Karine Jean-Pierre said, "On Wednesday, we have new CPI and inflation data, and we expect the headline number, which includes gas and food, to be highly elevated, mainly because gas prices were so elevated in June."
Then she tried to downplay the report by saying the results were backward-looking and stale. She supported her conclusion by highlighting lower energy prices since June.
Markets were not buying her spin and quickly reverted to risk-off mode. The major Asia equity indexes closed with losses, with Japan's Nikkei 225 index losing 1.77%. Australia's ASX 200 close nearly unchanged. European bourses are in the red but above their worst levels, led by a 0.67% drop in the German Dax. DJIA and S&P 500 futures are down 0.62% and 0.39%, respectively. WTI oil dropped 4.7%, while gold is close to flat.
The Canadian dollar is getting some pressure from slumping oil prices. The Opec Monthly oil report for July left its 2022 oil demand growth forecast unchanged at 3.4 million barrels/day. Non-Opec oil supply growth is unchanged.
EURUSD reached parity today after prices fell from 1.0055 overnight but quickly rebounded to 1.0040 in NY. The German and Eurozone ZEW survey was weaker than expected.
The Survey said, "The current major concerns about the energy supply in Germany, the ECB's announced interest rate hike, and further pandemic-related restrictions in China have led to a considerable deterioration in the economic outlook. The experts assess the current economic situation significantly more negatively than in the previous month and have further lowered their already unfavourable forecast for the next six months."
GBPUSD dropped to 1.1809 from 1.1908 to 1.1809, before bouncing to 1.1840. The move was driven by political uncertainty and broad US dollar demand.
AUDUSD traded in a 0.6712-0.6744 range with weak Business Conditions and Business Confidence data, not a factor.
The US and Canadian economic calendars are empty.
