- Wall Street’s meltdown extends around the globe.
- The Carney government’s latest budget is a non-event for FX
- US dollar is higher across the board, Antipodean currencies are the worst performers.
USDCAD open (6:00 am): 1.4068, overnight range 1.4009-1.4082, close 1.4020, WTI $90.63, Gold $4,064.83.
The Canadian dollar sank yesterday and again overnight as the rout on Wall Street spilled into equity markets around the globe. FX traders who had been lulled half to sleep by a week of tedious sideways trading got a rude wake-up call.
Canadians, and the Carney government, can take some comfort from a Wall Street Journal story headlined “Democrats Are Hatching a Plan to Reverse Trump’s Canada Tariffs.” According to the Journal, the effort has picked up some Republican backing in states like Michigan, Maine and Alaska. Don’t break out the champagne just yet. Trump can veto it, and overriding him takes 290 votes in the House and 67 in the Senate. Democrats have 253 and 54. Still, it gives them a stronger hand when Trump comes looking for help with his “pet projects.”
Finance Minister François-Philippe Champagne tabled the 2026 budget last night. FX traders barely looked up.
WTI bounced in a $89.07-$92.50 band overnight. Traders are pinning their hopes on a Democratic Congress pressuring the White House to wrap up the eight-month war with Iran, though Trump’s remarks keep muddying the waters. Saudi Arabia trimmed its benchmark crude price by $2.0/b.
Canada’s October jobs report is forecast to show a 13,600 gain, clawing back some of September’s 68,300 loss, with unemployment holding at 6.5%.
Today’s US payrolls report could add fuel to the Wall Street fire. October nonfarm payrolls are forecast to rise by 65,000, with unemployment steady at 4.2% and average hourly earnings up 0.3% m/m after a 0.1% gain. A hot number would firm up bets on a December Fed hike, while a weak one would take some heat off policymakers.
Asian stocks took a beating. Japan’s Topix collapsed 5.90%, while Hong Kong’s Hang Seng slid 1.27% and Australia’s ASX 200 dipped 0.49%.
As of 7:35 am, Germany’s DAX has dropped 2.20%, the UK FTSE is off 2.07% and France’s CAC-40 is down 1.60%. S&P 500 futures are up 0.27% while the US 10-year yield is 4.86%, and the DXY is at 101.99.
EURUSD slumped to the bottom of a 1.1168-1.1235 range, with traders paying no attention to a surprisingly robust German factory report. September industrial production jumped 0.7% m/m, beating forecasts for a flat reading, thanks in part to a seasonal bump in auto output. Disappointing Eurozone retail sales did the euro no favours.
GBPUSD is stuck near the bottom of a 1.3382-1.3468 band, getting no lift from Thursday’s 25 bp Bank of England hike to 4.00%, which had been fully priced. For now, FX traders are ignoring the carnage in equities and waiting for the US jobs numbers to point the way.
USDJPY has pushed to the top of a 157.26-158.38 range, helped by broad US dollar demand and risk aversion after Tokyo stocks took a pounding. All eyes are now on US nonfarm payrolls.
AUDUSD is hugging the lows of a 0.6862-0.6943 range as the global equity selloff drives investors into US dollars. Tuesday’s rate hike from the RBA, which came with a somewhat dovish tone, is adding to the Aussie’s woes.
