- Risk sentiment improves modestly
- FOMC minutes were hawkish
- US dollar is steady, underpinned by treasury yields.
USDCAD open: 1.3767, overnight range 1.3739-1.3777, close 1.3744, WTI 97.61, Gold 4,4530.95
The Canadian dollar tracked broad US dollar moves and the somewhat hawkish FOMC minutes limited gains.
Traders are weighing a tangle of competing headlines ahead of a holiday-shortened week. Monday is Memorial Day in the United States and the Late May Bank Holiday in Britain, leaving markets in a pre-weekend drift.
Trump declared Iran nuclear talks were entering the home stretch, and oil prices retreated on hopes the conflict was winding down. His accompanying warning that the US could resort to unpleasant measures if Tehran stalls was brushed aside. Pakistan has been playing an active back-channel role, though Iran has yet to formally acknowledge any progress. WTI oil prices bounced around in a 96.92-102.79 in the past 24 hours with traders are not aggressively buying into the end of the war chatter. WTI is trading at100.45 in NY.
Wednesday's FOMC minutes leaned hawkish, lending support to Treasury yields and putting a floor under the greenback.
Asian equities traded unevenly. The Topix added 1.64% and Australia's ASX 200 gained 1.47%, while the Hang Seng lost 1.03%.
As of 7:40 am, the French CAC 40 is down 0.46%, the German DAX has lost 0.51%,and the UK FTSE 100 is down 0.38%. S&P 500 futures have fallen by 0.27%, the 10-year Treasury yield is 4.612%, and DXY is 99.25.
EURUSD traded in a 1.1594-1635 range, with prices struggling to build on yesterdays gains. German and Eurozone PMI readings for both manufacturing and services came in soft, keeping the euro on the defensive. Some cushion came from tentative optimism over Iran and market chatter that the ECB may move rates higher in June.
GBPUSD chopped around in a 1.3375 and 1.3407 range, picking up a modest bid as risk appetite improved on Iran ceasefire hopes. The upside looks capped, however, with the hawkish FOMC tone a persistent headwind. UK PMI figures were uninspiring.
USDJPY drifted sideways in a 158.81 to 159.09 band, underpinned by elevated US Treasury yields and firm crude prices. Japanese manufacturing PMI at 54.5 was in line with forecasts and had no market impact.
AUDUSD bounced between 0.7100 and 0.7159 after a disappointing Australian jobs report. The economy shed 18,600 positions in April and the unemployment rate climbed to 4.5% from 4.3%, effectively squashing what little expectation remained for a June rate increase.
Today’s US data includes weekly jobless claims, Philadelphia Fed manufacturing index and Housing Starts.
