- Trump offers to meet Iran President at UN
- Oil prices plunge to $92.71
- US dollar opens on a mixed note but with an underlying bid
USDCAD open: 1.4022, overnight range 1.3983-1.4023, close 1.3985, WTI $93.81, Gold $4,345.96
The Canadian dollar continues to suffer from the substantial CAD/US interest rate differentials, while the 1.04% decline in WTI prices since Friday isn’t helping.
WTI reached $103.50 on Friday as markets priced in the risk of further US military action against Iran, but reversed course dramatically today, opening lower and sliding to $92.71. The sharp turnaround came after reports that Trump is willing to sit down with Iranian President Masoud Pezeshkian, who is in New York for the UN General Assembly. The magnitude of the move is striking considering that the Houthis subsequently targeted a Saudi Aramco facility in Yanbu with drones and missiles.
Bank of Canada Governor Tiff Macklem is due to address “economic developments” in Halifax today.
The US dollar also found some support from Fed officials Neal Kashkari and Jeffrey Schmid. Both defended last week’s rate increase, arguing that persistent inflation risks warranted the move.
Asian equity markets finished largely unchanged, with Japan’s Topix and Australia’s ASX 200 both flat. Hong Kong provided the exception, with the Hang Seng climbing 1.18%.
As of 7:45 am, 7:30 am, Germany’s Dax, is up 1.19%, the French CAC-40 has risen by 1.01% and the UK FTSE 100 is up 1.05%. S&P 500 futures have climbed 0.71%, the 10-year Treasury yield is 4.948% and the DXY is 100.23,
EURUSD ticked higher in a 1.1471-1.1490 range as the market continued to absorb the Fed’s more hawkish stance following last week’s rate increase. Germany’s right-wing AfD won the election in Mecklenburg-Vorpommern, although the other parties have ruled out forming a governing coalition with the party, which they characterize as neo-Nazi.
GBPUSD is at the top of its overnight 1.3369-1.3396 range although trading is far from robust. Rightmove House prices provided the only notable UK data, reporting a 0.8% y/y decline.
USDJPY rose sharply in a 156.58-157.31 range. Japanese markets are closed for a three-day holiday. Investors continued to assess the implications of Friday’s rate hike alongside cautious comments from BoJ Governor Kazuo Ueda, who indicated that another increase was far from certain.
AUDUSD ticked higher in a 0.7112-0.7139 band, peaking in early NY supported by forecasts from Australia’s major banks that the RBA will raise interest rates on September 29. Attention is now turning to RBA Governor Michele Bullock’s comments tomorrow, which could provide further clues about the central bank’s next move.
There are no significant Canadian or US economic releases scheduled for today.
