- Japan’s election results in super-majority for PM Takaichi
- China tells domestic banks to reduce US Treasury holdings
- US dollar slides as dollar debasement narrative heats up.
USDCAD open: 1.3649, overnight range 1.3616-1.3675, close 1.3679, WTI 63.76, Gold 4990.90
The Canadian dollar is trading higher as the greenback extends it overnight losses. There are not any domestic influences driving the gains.
Canada’s labour market report released on Friday offered little to cheer. The Bank of Canada continues to frame recent job losses as structural, tied to the broader reset in Canada US trade relations and forces well beyond the reach of monetary policy.
WTI crude traded sideways in a 62.63–63.89 range after Iran rejected US demands to halt uranium enrichment. Negotiations ended without an agreement, although Trump indicated that further talks remain on the table.
Markets will hear from a steady lineup of Fed speakers today, but the economic calendar is light, with no top-tier US or Canadian data scheduled.
The US dollar extended Friday’s slide in Asia before attempting to claw back some losses into the NY open. The selling pressure was triggered after China, under the banner of prudent risk management, urged domestic banks to cut exposure to US Treasuries, a move widely seen as a warning shot over Washington’s plans to ship weapons to Taiwan.
The nonfarm payrolls report that was delayed last Friday will be released on Wednesday and is expected to show job gains of around 70,000, up from 50,000 previously. Forecasts remain scattered after a run of soft employment indicators, while markets also have US Retail Sales, ADP employment data, and inflation readings to digest this week.
Asian equities surged, riding the sharp rebound in US technology stocks late last week. A landslide election victory for Prime Minister Sanae Takaichi’s party sparked a strong rally in Japanese equities, with the Nikkei jumping 3.89% and the Topix up 2.29%. Australia’s ASX 200 recovered most of Friday’s losses with a 1.83% gain, while Hong Kong’s Hang Seng advanced 1.76%.
As of 7:30 am, European markets were mostly firmer, with Germany’s DAX up 0.44%, while the UK FTSE 100 is down 0.17% and France’s CAC 40 is flat. S&P 500 futures were down 0.17%, the US Dollar Index sat at 97.2 and the 10-year Treasury yield was 4.226%.
EURUSD traded in a 1.1810–1.1870 range, extending Friday’s rally as divergent Fed and ECB policy outlooks continued to underpin the single currency. Additional support came from ongoing portfolio diversification away from the US.
GBPUSD moved within a 1.3587–1.36298 range, grinding higher despite mounting political uncertainty in the UK. Prime Minister Starmer’s decision to appoint Peter Mandelson as ambassador to the US stirred controversy, and the resignation of his chief of staff, Morgan McSweeney, fuelled speculation about leadership stability.
USDJPY traded in a volatile 156.22–157.66 range following Japan’s election result. Prime Minister Sanae Takaichi’s decisive victory and her pledge to suspend the 8% food tax without issuing new debt sent JGB yields sharply higher, with the 10-year climbing from 2.17% to 2.29%, driving sharp two-way price action in the pair.
AUDUSD ranged between 0.7010 and 0.7046, supported by broad US dollar weakness and expectations of another RBA rate hike.
