- ECB policymakers reiterate need for higher interest rates
- Equity markets gain ahead of US elections
- US dollar firmed overnight but still below Monday’s opening levels
USDCAD snapshot 1.3498-02, overnight range 1.3478-1.3525, close 1.3491, WTI $90.59, Gold $1670.60
The Canadian dollar is drifting with a bullish bias on the back of improving risk sentiment.
Global stock markets are climbing in anticipation of Republicans regaining control of the House of Representatives. Prices would accelerate if Republicans won the Senate as well, although few expect that outcome.
Traders are in “wishful thinking” mode. They continue to wish that China eases its covid restrictions which would spark a surge in economic grow, despite Chinese officials stating existing policies are not changing. They are also hoping that the Fed is close to finding a peak for US interest rates and have ignored the surge in the US 10-year Treasury yield which has climbed from 3.96% to 4.21% since the beginning of the month.
The Canadian dollar direction continues to be determined by global risk sentiment as measured by the S&P 500 index price action. That index has gained 9.0% in less than four weeks which has helped fuel a sharp rise in the Canadian dollar.
The USDCAD technical picture is bearish suggesting that while prices are below 1.3750 the risk is for a break below 1.3450 to extend losses to 1.3230. However, a move above 1.3560 warns of further 1.3450-1.3750 consolidation.
EURUSD fell from 1.0030 to 0.9972 overnight then climbed to1.0000 in NY. Eurozone retail sales fell 0.6% m/m (forecast -1.3%).
GBPUSD traded in a 1.1445-1.1536 band and opened in NY near the low. BoE Chief Economists Huw Pill may have undermined the currency when he said "We're not meant to be inflation nutters. We are meant to sort of manage this trade-off in a way that avoids unnecessary, counterproductive maybe, disruptions to the real economy."
USDJPY dropped from 146.93 to 146.16, despite the US 10-year Treasury yield sitting at 4.21%., perhaps weighed down by the fear of more BoJ intervention.
AUDUSD bounced in a 0.6446-.06489 range. Weaker than expected consumer sentiment and business confidence data point to a slower pace of RBA rate hikes.
NZDUSD see-sawed in a 0.5901-0.5951 band. Prices are supported by the RBNZ quarterly Survey of Expectations showing inflation expectations rose leading Westpac Bank economists to forecast a 75 bp hike in November.
There are no economics reports of note, and the US election suggests a quiet trading day.
