- BoC Governor delivers neutral to hawkish comments
- Hopes for a deal to reopen Strait of Hormuz rise.
- US dollar opens steady but with a bid.
USDCAD open: 1.4035, overnight range 1.4025-1.4050, close 1.4035, WTI $89.75, Gold $4,334.75
The Canadian dollar is grinding lower, driven by a volatile combination of widening CAD/US interest-rate differentials favouring the greenback, softer crude prices and renewed cross-border trade tensions.
Bank of Canada Governor Tiff Macklem offered a candid assessment of the challenges facing the economy yesterday, saying Canada has gone through “stages of grief” following the demise of open trade with the United States. He said trade uncertainty is weighing on economic growth, while the Middle East conflict is creating additional inflationary pressure. The result leaves the Bank caught between competing forces, making it difficult to justify a clear move toward either higher or lower interest rates.
WTI traded lower in a $89.18- $93.82 range. Hopes are for a diplomatic solution to reopen the Strait of Hormuz are rising after Trump has said he is open to meeting Iranian President Pezeshkian
Asia equity ended with Australia’s ASX 200 up 0.30%, the Hong Kong Hang Seng up 0.18% and Japan’s Topix finishing unchanged.
As of 7:10 am, the French CAC-40 is up 0.57%, the German Dax has gained 0.53% and the UK FTSE 100 is 0.19% higher. S&P 500 futures are flat, the 10-year Treasury yield is 4.935%, the DXY is 100.36
EURUSD bounced in a 1.1434-1.1479 range and fell to the low in Europe, before recovering most of the decline as New York opened. ECB Chief Economist Philip Lane warned that another increase in energy prices could push inflation higher before it begins moving back toward target from mid-2027. Traders largely brushed aside his comments as attention remained focused on events at the United Nations.
GBPUSD chopped around in a 1.3327-1.3388 range with gains running into resistance below the 1.3400 area. Prime Minister Burnham is expected to meet Trump on the sidelines of the UN and talk about the war in Iran and ask for further support for Ukraine.
USDJPY traded between 156.86 and 157.78 before giving back its earlier gains as oil prices declined and US Treasury yields moved lower. Trading volumes are lighter than usual with Japanese markets closed. The pair remains supported by expectations that the BoJ is unlikely to resume raising interest rates in the near term.
AUDUSD consolidated its recent decline, remaining within a relatively narrow range. RBA Governor Bullock reiterated that supply disruptions stemming from the US-Iran conflict, along with demand from AI data centres, are adding to inflationary pressures. Her comments reinforce expectations that the RBA will raise rates to 4.60% on September 29.
There Canadian and US economic calendar is empty of top tier data.
