- Risk sentiment improves after Trump said he would delay Iran attack
- Treasury yields slide and gave a boost to risk sentiment.
- US dollar opened mixed after trading in narrow ranges overnight
USDCAD open (6:00 am): 1.4229, overnight range 1.4207-1.4240, close 1.4226, close 1.42, WTI $90.82, Gold $4,186.57.
The Canadian dollar is counting down to a long Thanksgiving weekend as domestic markets will be closed on Monday. The Loonie probed resistance overnight and promptly reversed. Improved global risk sentiment led to a choppy overnight session for the G-10 major currencies and the Loonie went along for the ride.
Canada’s September employment report takes centre stage, with economists pencilling in a modest 7,000 gain after August shed 41,700 positions. The jobless rate is seen ticking up to 6.5% from 6.4%, numbers that won’t do a thing to coax the Bank of Canada off the sidelines in October.
WTI crude wandered through a $90.08-91.40 range, sitting comfortably below this week’s $93.20 high, although the intraday technical picture stays constructive as long as prices hold above $89.70. The softer tone followed Trump’s pledge to shelve, until after the US mid-terms, a threat to attack Iran that has already been announced, postponed and announced all over again.
President Trump says Iran can breathe easy until after the mid-terms, since the talks are apparently going swimmingly. President Pezeshkian maintains that Tehran never walked away from the table and is drafting proposals to pass along through intermediaries. Iran’s atomic energy chief, however, isn’t budging. Enrichment stays off the negotiating menu and the uranium stockpile isn’t going anywhere.
Risk appetite perked up on the news. Treasury yields eased, the 30-year auction drew healthy bids and the US dollar index slipped back from yesterday’s 102.42 high.
Asian bourses ended in the green, with Japan’s Topix adding 0.33%, Hong Kong’s Hang Seng climbing 1.79% and Australia’s ASX 200 rising 0.64%.
European equities are broadly higher as of 7:15 am, though they have surrendered some of their early gains. Germany’s DAX has advanced 1.02%, while France’s CAC 40 and Britain’s FTSE 100 are both up 0.94%. S&P 500 futures are 0.34% higher, the 10-year Treasury yield stands at 5.24%, the US Dollar Index sits at 102.18 and gold (XAUUSD) is trading at $4,183.22.
EURUSD edged lower in a 1.1208-1.1243 range, extending a week-long downward lean courtesy of French political and fiscal theatrics that pushed OAT yields higher. The pair has backed away from its overnight high even though the risk mood improved modestly after Trump opted to hold fire on Iran, for today at least, and oil prices drifted lower.
GBPUSD crept higher within a 1.3223-1.3251 band, bouncing off yesterday’s three-month low, although the recovery looks like nothing more than a correction inside the 1.3180-1.3310 corridor that has contained it for two weeks. Lofty gilt yields continue to lean on sterling, while the prospect of a November BoE rate hike keeps a floor beneath it.
USDJPY climbed through a 157.76-158.41 range, shrugging off cheaper crude thanks to recent dovish noises from BoJ officials and bets that the Fed will tighten in December. Japanese household spending fell 3.1% in August, the eighth straight decline, which says plenty about how reluctant consumers are to open their wallets.
AUDUSD eked out gains in a 0.6956-0.6989 range, helped along by a firmer risk tone, softer global bond yields, and a slightly weaker greenback. Next on the radar is Tuesday’s release of the RBA minutes from the September 29 meeting.
The University of Michigan preliminary October Sentiment data is on tap.
