- Trump waives sanctions on Russia oil
- Treasury yields consolidating losses
- US dollar continues to trade defensively
USDCAD open (6:00 am): 1.4096, overnight range 1.4088-1.4135, close 1.4141, WTI $98.37, Gold $4,167.63.
The Canadian dollar is adding to last week’s gains which came courtesy of a broad US dollar sell-off once markets slashed the odds of an October Fed rate hike. A rout in semiconductor and tech stocks, along with falling US Treasury yields, added fuel to the greenback’s retreat.
Albertans head to the polls today in what amounts to a referendum on whether to hold a referendum on staying in Canada.
The key question is: Should Alberta remain a province of Canada, or should the Government of Alberta commence the legal process required under the Canadian Constitution to hold a binding provincial referendum on whether or not Alberta should separate from Canada?
Option 1: Alberta should remain a province of Canada.
Option 2: The Government of Alberta should commence the legal process required under the Canadian Constitution to hold a binding provincial referendum on whether or not Alberta should separate from Canada.
WTI gapped down overnight, tumbling from $101.86 on Friday to a $96.74 low today before creeping higher into the New York open. The selling followed President Trump’s executive order waiving Graham Act sanctions and tariffs on Russian energy, which opened the door to more Russian crude reaching the market.
In Washington, Trump insists talks to end the Russia-Ukraine war are moving forward in a big way, and to keep Putin from walking away he has suspended sanctions on Russian energy. That earned him a rare bipartisan rebuke. Putin, for his part, is reportedly toying with a three-man summit on the war, with Trump and Xi Jinping the only names on the guest list.
The Middle East remains a far messier file for the White House. The Houthis keep firing at Saudi Arabia, the Strait of Hormuz standoff shows no sign of easing, and global supply chains are paying the price.
In Asia, Monday’s session ended with stocks unchanged to a touch firmer. The ASX 200 tacked on 0.44% to finish at 8,845.70, the Topix didn’t budge, and Hong Kong markets were shut for the Chung Yeung Festival.
As of 7:25 am, European bourses are down with the CAC-40 leading the slide at minus 1.47%, the DAX off 1.27% and the FTSE 100 down 1.08%. S&P 500 futures are pointing 0.47% higher. The US 10-year Treasury yield stands at 5.077%,and the DXY is 101.81.
EURUSD whipsawed between 1.1182 and 1.1235 overnight as the euro dropped, then popped. Credit the bounce to a dollar that is soft across the board. Don’t expect it to travel far, though. Street violence in France and beyond, plus a wider OAT/Bund spread as investors fret over Paris’s finances, should keep a lid on any rally.
GBPUSD spent the night in a 1.3308-1.3339 range, catching its breath after last week’s gains. A limp US dollar is lending support, and so are investors dumping EURGBP to get out of the way of France’s riots and budget headaches. On the data front, Rightmove’s October house price index jumped 1.0% m/m, up from 0.7% the month before.
USDJPY was jumpy but contained in a 157.70-158.22 range. Bank of Japan Governor Kazuo Ueda told markets underlying inflation is now within shouting distance of 2% and argued that hiking at the right pace would stop bond yields from running away.
AUDUSD ground higher through the night in a 0.6953-0.6981 range, with blowout China GDP numbers and a still-sagging greenback doing the heavy lifting. RBA Assistant Governor Kent poured some hawkish fuel on the fire, noting that the neutral rate seems to be moving up, which raises the question of whether policy is actually restrictive enough.
Economists see Canada’s September headline inflation climbing to 3.2% from 3.0% in August, with pricier oil doing most of the damage.
The Bank of Canada’s Business Outlook Survey also lands today.
