- Canada walks away from US trade ultimatums
- US Treasury Secretary to announce sanctions on Iran
- US opens higher on fresh risk aversion
USDCAD open: 1.3833, overnight range 1.3783-1.3844, close 1.3764, WTI 85.10, Gold 4,648.29
The Canadian dollar dropped on a fresh wave of made-in-America risk aversion and Prime Minister Carney's decision to tell US trade negotiators exactly where they could put their demands.
The Prime Minister had run out of patience after the Americans repeatedly rewrote terms at the eleventh hour, concluding that Washington cannot be relied upon to honour any agreement it signs, Carney explained his reasoning here. Washington tells a different story and pins the collapse on Ottawa, claiming Canada waited until the final moments to demand tariff relief on medium and heavy trucks.
Consider the source. Ford and GM sit at the epicentre of the auto-tariff fight, and it is fair to say they understand the file at least as well as Commerce Secretary Lutnick and Trade Representative Greer.
Ask yourself this: would Ford have committed $5 billion to retool its Oakville plant to build those truck if the tariffs were staying? Would GM be budgeting roughly $350 million to prepare Oshawa for its next-generation Silverado 1500 if that were the case?
The door was left open to try again. Carney announced that Canada will match US tariffs dollar for dollar, with the measures taking effect September 8.
WTI oil traded sideways in a $84.71-$86.56 range despite Bessent announcement that he will unveil what he calls "the greatest financial offensive ever marshalled" In response, Iran is threatening to halt all of its oil exports, and with the Strait of Hormuz still shut, following through would push WTI toward $100/b.
The are no top tier economic reports from Canada or the US today. The pending Iran sanction announcement from Bessent, and the lingering stench from his failed bond-buy back plan have sparked fresh risk aversion and put a lid on FX trading activity.
Asian equity markets ended mixed. Hong Kong's Hang Seng slid 1.89%, while Japan's Topix added 0.15% and Australia's ASX 200 advanced 0.49%.
As of 7:10 am, the UK FTSE 100 has added 0.18%, while the German DAX and the French CAC-40 are unchanged. S&P 500 futures are down 0.31% lower, and the US 10-year yield is 4.716%.
EURUSD drifted in a 1.1660-1.1688 range. The single currency eased in listless dealing as a fresh round of US-driven risk aversion and an empty top-tier data calendar drained enthusiasm from the session. Losses are cushioned by the sour global reaction to Bessent's attempt to steer Treasury yields.
GBPUSD chopped about in a 1.3622-1.3656 range. The pound took its cues from the same forces driving EURUSD but drew residual support from Friday's stronger than expected August PMI data, which pointed to improving consumer confidence and firmer economic growth.
USDJPY firmed inside a 158.59-159.28 range. The pair is modestly bid on the back of buoyant oil prices and elevated Treasury yields, but the prospect of a BoJ rate hike and the heightened risk of BoJ intervention are keeping a lid on gains.
AUDUSD hugged a narrow 0.7158-0.7177 range while consolidating Friday's advance. The lingering odour from Bessent's failed Treasury yield gambit is weighing on the pair, while renewed Iran-related risk aversion caps the topside.
