- Bank of Canada rate decision and MPR due
- Today’s FOMC decision will be a non-event
- US dollar opens on a mixed note
USDCAD open: 1.3944, overnight range 1.3924-1.3949, close, 1.3944, WTI 60.22, Gold 4023.79
The Canadian dollar broke through resistance yesterday and then extended the gains, albeit modestly, overnight. The rally was due to a bit of position adjustment and US dollar selling pressures against the other major G-10 currencies ahead of the BoC and FOMC decisions today.
The Bank of Canada’s policy announcement will almost certainly deliver a 25 bp rate cut. The real intrigue lies in the quarterly Monetary Policy Report, released just before Governor Tiff Macklem’s 10:30 a.m. press conference. Markets will be watching for any signal that policymakers want to temper expectations for another cut in December. Still, the absence of a U.S.–Canada trade deal and the potential fallout for the auto sector argue strongly for maintaining an easing bias.
WTI oil traded between $59.71 and $60.53, with upside momentum capped by speculation that OPEC will soon confirm another production hike effective December 1.
The FOMC meeting is expected to pass quietly. A 25 bp rate cut has been fully priced in, and with the government shutdown limiting access to key economic data, policymakers have little fresh insight to guide their decision.
Asian markets were mixed overnight. Japan’s Topix slipped 0.23%, Hong Kong’s Hang Seng fell 0.33%, and Australia’s ASX 200 dropped 0.96%.
European indexes are mostly flat apart from the UK FTSE 100, which is up 0.59%. S&P 500 futures are higher by 0.27%, the U.S. Dollar Index sits at 98.85, the 10-year Treasury yield is 3.994%, and gold (XAUUSD) is at $4019.53.
EURUSD traded in a 1.1618-1.1661 range and is consolidating recent gains ahead of today’s Fed decision and tomorrow’s ECB announcement. The short-term tone is positive above 1.1610, with a break through 1.1670 pointing toward 1.1750.
GBPUSD traded between 1.3198-1.3281 and remains soft as fiscal worries and the prospect of a £30 billion tax hike weigh on sentiment. The BoE is widely expected to hold rates steady at 4.00% next week, with a Reuters survey showing most economists anticipating no change.
USDJPY traded in a 151.54-152.54 band in choppy overnight action. The pair remains supported by expectations that the BoJ will leave rates unchanged tomorrow, though traders are cautious in case officials hint at a more hawkish stance.
AUDUSD traded in a 0.6578-0.6618 range and firmed after inflation data surprised to the upside. The RBA’s Trimmed Mean CPI rose 1.0% q/q (forecast 0.8%, previous 0.6%), effectively ruling out the possibility of rate cuts in the near term.
