- Somewhat dovish Fed comments weigh on greenback
- US September CPI expected to rise 3.7% y/y
- US dollar opens with losses across the board.
USDCAD open (6:00 am):1.4214, range since Friday, 1.4197-1.4223, close 1.4216, WTI $94.98, Gold $4,143.40.
The Canadian dollar caught a bid of a bid after yesterday’s comments from Fed official led to hopes that the Fed may be in a “one and done” mode.
NY Fed President John Williams said yesterday that he sees just one more round of tightening, arguing that disinflationary forces remain at work and that the labour market shows no sign of stoking price pressures, with broad-based price gains confined to AI-related areas and energy. and a December hike may be the last for this cycle.
Tighter CAD/US yield spreads have supported the loonie gains.
WTI has risen to the upper edge of a $94.00-$95.63 band after a missile reportedly struck Saudi Aramco’s headquarters and a container vessel came under attack in the Strait of Hormuz. The International Energy Agency (IEA) does not expect the world’s diesel crunch to ease until well into 2027.
Economists expect headline US CPI to have climbed to roughly 3.6%-3.7% in September from 3.4% in August, a result that would firm up bets on a December Fed rate hike. A print north of 4.0% would change the calculus and could drag an October hike back into the conversation.
Asian equities ended in the red. Australia’s ASX 200 slid 0.64%, Japan’s Topix shed 0.34% and Hong Kong’s Hang Seng gave up 0.13%.
As of 7:30 am European bourses are higher with the German DAX and French CAC-40 rising 0.65% while the UK FTSE 100 lags with a 0.38% gain. S&P 500 futures are up 0.18, and the US 10-year Treasury yield is 5.20%
EURUSD edged up in a tight 1.1191-1.1212 range as sellers piled into the US dollar ahead of today’s US inflation figures, but French fiscal angst kept a lid on the gains. ECB President Christine Lagarde poured cold water on the idea of stepping in to prop up French bonds, making it clear that the mess is France’s to clean up.
GBPUSD rose in a 1.3249-1.3276 band, grinding higher through the Asian session before holding its ground in Europe as the greenback softened ahead of the US CPI release. Sterling found extra lift from the IMF, which bumped its 2026 UK growth forecast up to 1.3% from 1.0%, and from yesterday’s somewhat dovish Fed commentary.
USDJPY crept higher in a 158.11-158.52 range as traders rethought the path of Japanese interest rates, particularly amid rumours that the BoJ has little appetite for back-to-back hikes. Firm oil prices are lending the pair additional support.
AUDUSD is testing the top of its 0.6978-0.7014 overnight range in early NY trading, powered by robust Chinese trade data and a greenback weighed down by dovish Fed remarks ahead of the CPI numbers. The upside may be capped, however, after the IMF warned that Australia faces one of the steepest rises in unemployment in the developed world, even as it forecast 2026 inflation at 3.9%.
