- Risk sentiment improves slightly
- WTI extends losses on talk of renewed US and Iran dialogue
- US dollar ending the week with losses across the board.
USDCAD open: 1.4170, overnight range 1.4136-14176, close 1.4169, WTI 71.83, Gold 4,105.23
The Canadian dollar rallied during the Asian session on word that Iran and the US, working through intermediaries, are attempting to revive ceasefire talks. The move lower unwound through the European morning, leaving the pair back near its New York close.
Canada's June Labour Force Survey is due today. Economists are looking for a gain of 10,000 jobs, a sharp slowdown from May's 87,700 increase, and for the unemployment rate to hold steady at 6.6%. The Bank of Canada remains more focused on inflation than employment, even with its preferred price gauges sitting near the middle of its target band, and today's report is unlikely to shift the central bank from its wait-and-see stance.
WTI crude pulled back from Thursday's 75.84 high to an overnight low of 71.18 before recovering to 71.95 today, as traders hope Iran and the US avoid further escalation.
Global markets are heading into the weekend on a subdued note. The geopolitical noise around NATO and Iran that rattled headlines earlier in the week has settled, and attention is turning to next week's US inflation print and Kevin Warsh's inaugural appearance before the US House Financial Services Committee. Axios reports that mediators from Qatar and Pakistan are engaging with Iranian and US negotiators in an effort to revive the ceasefire.
Asia closed higher across the board: Japan's Topix added 0.39%, Australia's ASX 200 climbed 0.50% and Hong Kong's Hang Seng finished up 0.60%.
AS of 7: 30 am, European markets are little changed heading into the session, with Germany's Dax up 0.12% and the CAC, FTSE 100 and S&P 500 futures all roughly flat as of 7:30 am. The 10-year Treasury yield sits at 4.545%, and the DXY is at 100.86
EURUSD traded in a 1.1427-1.1461 band, supported by a modest shift towards “risk-on” on the back of the US-Iran developments. Gains remain capped, however, after the FOMC minutes reaffirmed the Fed's mildly hawkish lean, and analysts pushed their ECB rate-hike call from July to September. German HICP printed in line with forecasts at 2.4% y/y for June, matching May's reading.
The pound firmed in a 1.3399 and 1.3452, favoring the upside after Bank of England Chief Economist Huw Pill struck a hawkish tone, cautioning that UK rates remain insufficiently restrictive and "will need to increase" before year-end.
USDJPY dropped to 161.29 from 162.46 on the day, slipping to its session low after Finance Minister Satsuki Katayama signaled plans to push the Government Pension Investment Fund (GPIF) and other public funds toward greater domestic investment.
The Aussie drifted in a 0.6934-0.6970 range and looks set to close the week. AUDUSD continues to be underpinned by an RBA official's hawkish remarks earlier in the week pointing to persistent inflation as a reason rates may still need to rise.
