- US Treasury yields remain elevated, supporting US dollar
- Canada July GDP expected to show no growth
- US dollar opens higher across the board but eases modestly in early NY trading
USDCAD open (6:00 am): 1.4200, overnight range 1.4170-1.4202, close 1.4176, WTI $92.39, Gold $4,145.91.
The Canadian dollar extended its overnight losses, pressured by broad-based U.S. dollar strength, elevated Treasury yields, and persistently wide Canada-U.S. 2-year and 10-year interest rate spreads.
Compounding these currency headwinds, President Trump’s latest trade measures against Canada took effect at 12:01 AM, targeting roughly $1.0 billion in Canadian goods, including dairy and alcohol products.
Against this backdrop, Statistics Canada is set to report July GDP figures, with growth forecast to remain flat at 0%. While a stagnant growth reading would normally command significant attention, it is expected to take a backseat to ongoing bilateral trade developments.
WTI crude traded within a $92.00 to $94.72 range as news that Saudi Arabia has resumed shipments from its Red Sea port helped cap the recent oil rally.
Bank of Canada Deputy Governor Toni Gravelle is scheduled to speak in New York at 1:30 PM, where Broader macroeconomic pressures continue to stem from the United States, where a near-perfect combination of energy shocks, a resilient economy, a hawkish Federal Reserve outlook, and a heavy flood of technology and AI-related bond issuance is driving Treasury yields toward levels not seen in decades.
The U.S. 10-year yield reached 5.28% yesterday before easing to 5.217% this morning. Market participants will look to today’s U.S. Job Openings and Labor Turnover Survey (JOLTS) for further direction, with openings expected to decline to 7.23 million from 7.271 million.
US Consumer Confidence is expected to improve to 90.1 from 89.4. The Case-Shiller Home Price Indices are also due.
Asian equities were mixed. Japan’s Topix fell 1.72%, Hong Kong’s Hang Seng slipped 0.48%, while Australia’s ASX 200 rose 0.34%.
As of 7:30 am, European bourses are higher, led by Germany’s DAX which gained 0.68%. The UK FTSE 100 is up 0.42%, while France’s CAC-40 has added 0.26%. S&P 500 futures are up 0.14%, the US 10-year Treasury yield is 5.217%,and the DXY is 101.34.
EURUSD bounced around in a 1.1332-1.1374 range. The single currency is under pressure from broad US dollar demand as surging Treasury yields continued to support the greenback. ECB President Lagarde adopted a slightly dovish tone, reiterating that a measured policy response remains appropriate to keep inflation under control. The Eurozone Economic Sentiment Indicator came in at 97, (forecast 99, previous 98.5). Consumer Confidence was unchanged at -16.5.
GBPUSD traded defensively in a 1.3221-1.3274 range. Prices eased downward as US Treasury yields rose which also provided broad demand for US dollars. The only UK economic release today was BRC shop price inflation, which slowed to 1.4%.
USDJPY moved sideways in a 157.21-157.58 band. Japanese Finance Minister Satsuki Katayama reiterated that Treasury Secretary Bessent had agreed to increase cooperation kept intervention fears on the table. However, rising oil prices and Treasury yields provided a floor.
AUDUSD traded in a 0.6978-0.7030 range, with the peak seen in the aftermath of the RBA 25bp rate hike to 4.60%. The RBA’s hawkish guidance was subsequently overwhelmed by broad US dollar strength as Treasury yields climbed.
