- Trump announced new tariffs on Canada
- Oil prices steady but cautiously bid.
- USD posted gains across the board at the NY open
USDCAD open: 1.4057, overnight range 1.4056-1.4087, close 1.4071, WTI 83.11, Gold 4066.55
The Canadian dollar came under pressure on Monday when domestic inflation cooled more than expected. The news served to remove any reason for the Bank of Canada to raise interest rates in the near term.
The Loonie sank further after Trump announced a new round of tariffs on Canada.
Global risk sentiment is cautious, Iran is said to be dangling another 10-day ceasefire, while Washington is pushing back, demanding a longer truce and a partial reopening of the Strait of Hormuz. Meanwhile, the Iranian backed Houthis in Yemen have announced a blockade of the Bab-el-Mandeb Strait, a critical corridor for Saudi crude exports.
The news has underpinned the US dollar against the majors.
Asian equity markets were mixed as Japan reopened for trade, with the Topix jumping 2.44%. Hong Kong's Hang Seng and Australia's ASX 200 both finished little changed.
As of 7:30 am, European equities are edging higher across the board. London's FTSE 100 added 0.13%, Paris's CAC 40 gained 0.11%, and Frankfurt's DAX rose 0.12%. S&P 500 futures point 0.40% higher, the 10-year Treasury yield sits at 4.598%, the DXY is at 100.97, and gold trades at 4,057.70.
EURUSD drifted in a tight 1.1409-1.1429 band as traders stayed on the sidelines, unwilling to pick a lane amid mixed Middle East signals. The question hanging over the pair is whether Houthi involvement widens the conflict or pushes Washington toward accepting another ceasefire. With the ECB decision due Thursday and no rate change expected, there's little else to push EURUSD out of its shell.
GBPUSD slipped in a 1.3416-1.3455 range, weighed down by what might be called new-PM jitters. Prime Minister Andy Burnham committed to sticking with existing fiscal rules after 10-year gilts lagged their European peers a day earlier. Sterling's bigger driver, though, was a soft-landing employment report that eased pressure for a rate hike, with joblessness holding steady at 4.9%.
USDJPY climbed to the top of its overnight 162.43-162.70 range as firmer crude prices and the growing threat of further supply disruptions lent the pair support. The unresolved Middle East conflict continues to box in the BoJ's room to lift rates.
AUDUSD rallied through a 0.6964-0.7015 band as broader risk appetite improved, though traders kept some caution in reserve. Attention now turns to Thursday's jobs data, with forecasts pointing to a 15,000 gain in employment.
There are no top tier US or Canadian economic reports today.
