- US and Canadian jobs data ahead.
- Fed rate cut on September 17 is fully priced in.
- US dollar opens with losses and trading with a negative bias.
USDCAD open 1.37950, overnight range 1.3790-1.3822, close, 1.3820, WTI 63.36, Gold 35552.83
The Canadian dollar is inching higher as US rate cut optimism fuels heavy dollar selling across the majors. Today’s nonfarm payrolls release is expected to cap off a string of weak labor data this week, reinforcing expectations for the Fed to cut 25 bps on September 17—a move markets have already fully priced in.
Canada’s August employment report is also due, with forecasts pointing to a modest gain of 7,500 jobs following July’s 40,800 loss. Whatever the outcome, the release will likely be drowned out by the US payrolls headline.
The renegotiation of the Canada-US-Mexico Free Trade Agreement begins next month as is expected to be a long drawn-out process.
WTI ranged trickled lower in a 62.85 and 63.49 range as higher-than-expected US crude stockpiles and worries about an OPEC supply boost starting October 1 weighed on sentiment.
Several Fed officials, including New York Fed President John Williams, have been nudging expectations toward easier policy while admitting tariff-driven inflation risks have diminished. It’s telling how lawsuits, political feuds, and forced resignations can end up steering monetary policy. Trump ally Stephen Miren, meanwhile, insisted that no one from the administration pressured him to cut rates.
Wall Street embraced rate-cut fever, pushing the S&P 500 to a fresh record. The upbeat mood spread to Asia, with Japan’s Topix up 0.82%, Australia’s ASX 200 higher by 0.51%, and Hong Kong’s Hang Seng gaining 1.43%. As of 7:30 am EDT, London’s FTSE 100 was up 0.31%,the German DAX added 0.21%, and the French CAC 40 rose 0.24% S&P 500 futures gained 0.21%. The dollar index was steady at 98.03, and the US 10-year yield sat at 4.158%.
EURUSD traded a 1.1648-1.1692 band and is sitting at the top end as dollar sellers dominate. Markets see payrolls as the catalyst for the Fed to launch an easing cycle that erodes America’s rate advantage over the euro area. Upside momentum could falter if French Prime Minister Bayrou loses Monday’s no-confidence vote or if the Ukraine conflict worsens. Technical signals favor more gains while above 1.1600, with a break of 1.1730 pointing to 1.1840.
GBPUSD ranged between 1.3426 and 1.3485, climbing through early New York trade on the back of stronger UK numbers. July retail sales rose 0.6% m/m, while the ex-fuel measure was up 1.3% y/y versus forecasts of 1.2%. Halifax reported house prices 2.2% higher y/y over the last three months. While holding above 1.3430, the pair is targeting 1.3540.
USDJPY moved in a narrow 148.08-148.54 range and is hovering near the lows. Economic data painted a mixed picture: wages rose 4.1% y/y compared to 3.1% in June, but household spending flatlined at 1.4%. Automakers caught a break after Trump cut tariffs to 15% from 27.5%. Trade discussions between Washington and Tokyo remain ongoing.
AUDUSD traded between 0.6510 and 0.6548, climbing on broad US dollar weakness tied to Fed rate cut expectations. The idea that the Fed will ease while the RBA stays on hold is underpinning the Aussie.
