- BoC Governor repeats rate hikes are nearing an end
- New Zealand employment report is better than expected
- US dollar opens on mixed note compared to Tuesday’s opening
USDCAD snapshot open 1.3596-99, overnight range 1.3587-1.3633, close 1.3631, WTI $88.25, Gold $1654.55
The Canadian dollar continues to meander like rafters on a theme park ride while stuck in a well-defined range.
Last night, Bank of Canada Governor Tiff Macklem addressed the Senate Standing Committee on Banking Trade and the Economy. His comments were almost identical to the monetary policy statement and ignored by FX traders.
Mr Macklem delivered a somewhat muddle message. He opened with “Last week, we raised the policy interest rate by 50 basis points to 3.75%. This is the sixth consecutive increase since March. Quantitative tightening continues and is complementing increases in the policy rate. We also expect our policy rate will need to rise further.”
He detailed four reasons for raising interest rates. They included inflation, economy in excess demand, economic growth, and a need to restore price stability.
He also said the tightening cycle will draw to a close but didn’t know how high rates would have to rise before that happened. Useful? Not much.
Today’s focus in on the FOMC meeting at 2:00 pm. The Fed is widely expected to raise the fed funds rate by 75 bps to 4.00% but there is no consensus as to whether it will be a hawkish or dovish hike. Many believe that if the Fed continues to aggressively raise rates, it will almost guarantee a recession. They expect the Fed to hint at a slower pace of increases beginning in December.
Others believe that recent economic reports ensure the Fed will continue to raise rates. Goldman Sachs economist think the Fed will raise rates by 75 bps today, 50 bps in December and 25 bps in February and March.
EURUSD traded in a 0.9871-0.9911 band with prices supported by hawkish comments by ECB officials supporting the need for sharply higher EU interest rates.
GBPUSD bounced in a 1.1476-1.1525 band while awaiting the Fed and tomorrows Bank of England meeting. The risk of a hawkish Fed and a dovish BoE is limiting gains.
USDJPY is at the bottom of its overnight 1.4700-148.36 range with prices weighed down by fears of a hawkish Fed and BoJ intervention. The minutes from the BoJ September meeting were a non-factor.
AUDUSD traded in a 0.6386-0.6429 band with prices tracking general risk sentiment.
NZDUSD climbed steadily overnight, rising from 0.5836 to 0.5889 in NY, supported by a strong labour market report highlighted by rising wage inflation.
The are no top tier economic reports from the US or Canada today.
