- US employment picture in focus today.
- Fed policy makers reiterate dovish comments
- US dollar opens higher vs majors compared to yesterdays close.
USDCAD open 1.3820, overnight range 1.3792-1.3826, close, 1.3793, WTI 63.25, Gold 3538.88
The Canadian dollar extended yesterdays losses as it slowly drifted lower overnight due to broad-based US dollar demand ahead of todays employment data.
Yesterday, Fed Governor Christopher Waller said he wants rates reduced this month and hinted at several more cuts ahead. Atlanta Fed President Raphael Bostic agreed that easing was appropriate but avoided giving a timeline. Minneapolis Fed President Neel Kashkari added that the neutral rate sits near 3.0%, leaving scope for additional cuts.
Even with the dovish tone, the US dollar still found buyers.
WTI traded in a 62.91-63.84 range and is sitting near the bottom end on speculation that OPEC could announce another production hike on September 8. Russia’s President Putin appeared upbeat after Moscow and Beijing signed an agreement to expand crude sales to China.
Todays focus is on the US jobs market. Challenger job cuts , the ADP Employment Change report, weekly jobless claims and the ISM Services Employment Index (July 46.4) are due. A weak showing across the board would lift the chances of a downside surprise in tomorrow’s payrolls release.
Global equity markets were mostly higher. Australia’s ASX 200 gained 1.00% and Japan’s TOPIX added 1.03%, while Hong Kong’s Hang Seng slipped 1.12% on fears of tighter regulatory measures. As of 7:30 am EDT, softer bond yields boosted the German DAX by 0.77%, the French CAC 40 by 0.91%, and the UK FTSE 100 by 0.54%. S&P 500 futures are higher by 0.54%. The US Dollar Index sits at 98.35, gold is steady near 3547.61, and the 10-year Treasury yield is 4.28%.
EURUSD traded in a 1.1639-1.1669 range as soft Eurozone data and position-squaring ahead of NFP limited gains. Retail sales increased 2.2% y/y, below the 2.4% forecast, raising concern that consumer demand may not be enough to offset the drag from US tariffs.
GBPUSD traded between 1.3417 and 1.3460 in choppy action. The move came as global bond market tensions eased and Governor Bailey signaled a more cautious approach to further BoE rate cuts. Markets are not expecting policy changes on November 6, with attention instead on the November 26 Autumn budget.
USDJPY traded in a 147.79-148.42 band with buyers dominating. Analysts continue to argue that the BoJ is in no rush to hike rates, and with investors trimming dollar shorts ahead of Friday’s jobs data, the pair stayed supported. US-Japan trade talks also kick off in Washington today.
AUDUSD traded negatively in a 0.6517-0.6550 range, erasing much of yesterday’s advance. Broad US dollar demand overshadowed news that Australia’s trade surplus widened to AUD 7.31 billion from 5.36 billion in July.
