- Risk aversion rippling through markets.
- Traders fear US and Iran escalation.
- US opens mixed but modestly higher.
USDCAD open: 1.3867, overnight range 1.3862-1.3879, close 1.3875, WTI 84.03, Gold 4,393.03
The Canadian dollar is nearly unchanged with the sleepy price action reflecting broad FX market apathy. Traders treated the persistent Middle East strife, Trump's latest round of erratic outbursts and fading Fed rate hike expectations as old news that was already baked into prices. Nothing to see here, folks.
Today marks the final session of trade negotiations between Washington and Ottawa before Trump's 50% tariffs take effect. The talks dominate headlines at home but attract little notice beyond Canada's borders.
WTI oil edged upward in a 83.80-84.84 band, lifted by the continuing standoff between the US and Iran and by Trump's newest threat, this one aimed at bombing Oman.
On the data front, the US calendar offers export prices, housing starts, capacity utilization, industrial production and pending home sales. FX traders are unlikely to give any of it a second glance.
The greenback is caught between two opposing forces: markets have dramatically scaled back bets on a September Fed rate hike, while Middle East tensions continue to intensify. Meanwhile, the Strait of Hormuz is all but shut, with just a trickle of vessels moving through, despite Trump's insistence that the waterway is under US control.
Asian markets finished largely unchanged, although Japan’s Topix fell 1.05%. Hong Kong’s Hang Seng and Australia’s ASX 200 were flat.
As of 7:15 am, the UK FTSE 100 is unchanged while the German DAX has lost 0.33%. The French CAC-40 is down 0.43%. S&P 500 futures were down 0.48%, the US 10-year yield is 4.742%, and t the DXY is 99.65.
EURUSD drifted in a 1.1567-1.1586 range and despite falling expectations for a September Fed rate hike and better-than-expected ZEW Survey results. Economic Sentiment jumped 7.9 points to 34.2, while the Current Situation Index improved 16.5 points to -61.1.
GBPUSD traded in a 1.3520-1.3554 range. A weaker-than-expected UK employment report weighed on prices. Employment growth slowed to 83K from 147K while Unemployment was unchanged at 4.9% The results suggest that the BoE does not need to raise rates.
USDJPY drifted quietly in a 159.30-159.78 band. Prices remained bid as concerns about higher oil prices resulting from Middle East supply disruptions overshadowed expectations of a September BoJ rate hike. Rising US Treasury yields provided additional support. However, renewed fears of BoJ FX intervention have kept the pair below 160.00.
AUDUSD traded in a 0.7095-0.7115 range in an otherwise quiet overnight session as broader US dollar trading against the major currencies remained subdued. The Australian dollar was near the top of its range after Westpac’s consumer confidence index improved to 6.0% from 4.1% in July.
On the data front, the US calendar offers export prices, housing starts, capacity utilization, industrial production and pending home sales. FX traders are unlikely to give any of it a second glance.
