- Traders are on the sidelines awaiting today’s FOMC meeting
- Oil prices are trading with negative bias after IEA predicts global glut in 2027
- US dollar inches higher into Fed meeting
USDCAD open: 1.4003, overnight range 1.3990-1.4008, close 1.3997, WTI 76.05, Gold 4,329.17
The Canadian dollar drifted with no clear direction, weighed down by the heavy uncertainty hanging over today's FOMC decision.
WTI oil prices slid in a 74.60-76.83 band, hugging the floor of their recent range. The pressure stems from Washington clearing Iran to resume oil sales right away. On top of that, the International Energy Agency expects a sizeable crude surplus in 2027 as the world gradually recovers from the shutdown of the Strait of Hormuz.
Kevin Warsh steps onto the financial world's biggest stage today as he chairs his first FOMC press conference. A rate cut is off the table for this meeting, but with the Iran war wrapped up and oil prices in freefall, he has room to lean dovish once the questions start. The accompanying statement carries a fresh Summary of Projections, and a good number of analysts suspect Warsh will sit out the dot-plot exercise entirely. That said, recent remarks from FOMC members point to a hawkish lean in the statement.
Across Asia, equities ended without a clear direction. Japan's Topix added 0.55% and Australia's ASX 200 matched it with a 0.55% gain, while Hong Kong's Hang Seng slipped 0.74%.
By 7:00 am, France's CAC 40 was up 0.26% while Germany's DAX, the UK FTSE 100, and S&P 500 futures all were unchanged. The 10-year Treasury yield was 4.428%, and the DXY was 99.61.
EURUSD held in a 1.1598-1.1617 range as traders waited on the FOMC. Headline HICP, the Core Harmonized Index of Consumer Prices, came in at 2.6% y/y against a 2.5% forecast and prior, reinforcing the ECB's decision to hike last week. A measure of support is also coming from softer oil.
GBPUSD wandered within a 1.3409-1.3436 band, rudderless as the approaching Fed meeting drowned out a raft of UK data. Headline inflation held at 2.8% y/y, steady from April, while core CPI nudged up to 2.6% from 2.5%, still shy of expectations. May PPI printed 8.7% versus an 8.8% forecast and April's 7.9%, and retail prices rose 3.1% against 3.0% the month before. The Bank of England takes its turn tomorrow.
USDJPY eased off its session high, settling into a 160.12-160.47 span as positioning ahead of the Fed took over. The market still expects a somewhat hawkish FOMC, and that is what is keeping the pair supported even after the BoJ lifted rates 25bps to 1.00% a day earlier.
AUDUSD changed hands quietly in a 0.7054-0.7073 range. The RBA stood pat at 4.35% yesterday, but Governor Michelle Bullock struck a hawkish note, warning that the economy is in for a rough couple of years as it works inflation back down from 4.2%,
Todays Canadian data includes New House price index while the US releases Retail Sales, Business inventories and pending home sales.
