- Greenback rises with Trump presidential odds.
- JOLTS job-openings and Fed Powell in focus today.
- US dollar consolidating Monday’s gains.
USDCAD: open 1.3731 overnight range 1.3727-56 close 1.3738, WTI $83.92, Gold, $2324.77
The Canadian dollar has had a topsy-turvy few days. Friday’s highly anticipated US Core Price Index data showed inflation cooling to 2.6% y/y from 2.8% previously, the lowest in three years. That was followed by the Michigan Consumer Sentiment Index ticking up to 68.2 from 65.6, which was offset by the inflation component falling to 3% from 3.1%. The net result was broad-based US dollar weakness, higher equity prices, and lower Treasury yields.
That changed dramatically yesterday. While Canadians were celebrating Canada Day, European traders were stunned by the dramatic victory by Marine Le Pen’s National Party in the first round of the French elections. President Macron’s Renaissance party finished third. The initial reaction was to sell EURUSD, but those pressures eased when analysts said the result could have been worse.
Dollar bulls got fresh incentive when the US Supreme Court ruled that “former presidents have absolute immunity from prosecution for official acts that fall within their exclusive sphere of constitutional authority and are presumptively entitled to immunity for all official acts.” That result boosted Donald Trump’s re-election hopes.
Asian equity indexes closed with Japan’s Nikkei rising 1.12% while Australia’s ASX 200 fell 0.42%. European bourses are posting steep losses with the German DAX down 1.15% and the French CAC 40 index losing 0.89%. S&P futures are down 0.49%.
EURUSD traded between 1.0709 and 1.0771 since Monday due to uncertainty around the French elections and broad US dollar demand. Traders ignored Eurozone June inflation data (Core-HICP 2.9%, unchanged from May) and the Unemployment report which at 6.4% was also unchanged.
GBPUSD was undermined by Monday’s weaker than expected June Manufacturing PMI (actual 50.9 vs forecast 51.4) and dropped from 1.2707 to 1.2615 overnight. GBPUSD was also pressured by widespread US dollar demand after the Supreme Court ruling and uncertainty around the French elections.
USDJPY rallied from 160.63 on Monday to 161.77 in tandem with the surge in the US 10-year Treasury yield which jumped from 4.261% on Friday to 4.454% this morning.
AUDUSD traded in a 0.6634-0.6661 range overnight. The minutes of the June 18 RBA meeting revealed policymakers were concerned about upside risks to inflation and discussed raising.
Today’s data includes the US JOLTS job openings survey while Fed Chair Jerome Powell is on a panel at the annual EU symposium in Portugal.
