- Tech stock sell-off sparks safe-haven demand for US dollars
- Oil prices slide with Strait of Hormuz opening
- US dollar rises against G-10 majors.
USDCAD open: 1.4233, overnight range 1.4205-1.4239, close 1.4212, WTI 72.04, Gold 4,064.15
The Canadian dollar continued to slide, driven by broad dollar demand on growing conviction that the Fed will raise rates come September.
Comments from BoC Governor Tiff Macklem yesterday did little to lift sentiment. He cautioned that global economic imbalances are channelling overinvestment into the US, a trend he said poses risks to global financial stability. Stalled USMCA trade talks and Trump's open hostility toward Canada round out the list of factors weighing on the loonie.
WTI crude held a 71.56-73.17 range, hovering near its overnight low. Qatar said its LNG shipments could return to normal levels within a few weeks. Meanwhile, Strait of Hormuz traffic remains active, with 23 ships in transit and another 23 that have completed the voyage over the past 24 hours.
Wall Street tumbled yesterday, pulling overseas markets lower in its wake. Tech shares bore the brunt of the selling as worries mounted that the AI rally has run too far too fast.
The equity rout, paired with growing bets on a September Fed rate hike, pushed the US dollar index higher, up 0.23% overnight and 0.80% over the past five trading days.
Asian equities closed mixed. Japan's Topix fell 0.67%, Australia's ASX 200 gained 0.24% and Hong Kong's Hang Seng added 0.33%.
As of 7:30 am, the Dax has lost 1.07%, the CAC 40 has gained 0.22% and the UK's FTSE 100 is unchanged. S&P 500 futures are up 0.14%, the 10-year Treasury yield sat at 4.483%, and the DXY is 101.68.
EURUSD slipped into a 1.1338-1.1385 band as equity market jitters stoked safe haven demand for the greenback, compounding already weak technicals. The break below 1.1370, a level not seen since April 2025, opens the door to further losses toward 1.1210. Hawkish remarks from ECB Chief Economist Philip Lane, who flagged inflation staying above 2.0% for some time, did little to change the picture.
GBPUSD settled into a 1.3166-1.3209 band, weighed down by political uncertainty, soft services and composite PMI readings and broad US dollar strength. The decline would have been steeper had sterling not gained ground against the euro.
USDJPY held a tight 161.50-161.78 range as steady Treasury yields and firm dollar demand were largely offset by hawkish minutes from the BoJ's June 16 meeting. At the time, policymakers hiked rates to 1.0% and one member pushed for further increases every few months.
AUDUSD hovered near 0.6885-0.6924 due to the broader equity sell-off and a mixed inflation print. Headline CPI came in at 4.0% y/y for June, undershooting the 4.4% forecast and easing from May's 4.2%. Trimmed mean CPI, however, climbed 3.6%, a result likely to keep the RBA on the sidelines for now
There are no Canadian economic reports due. The US releases New Home Sales data for May, unlikely to move markets in any meaningful way.
