- Global equity indexes post gains.
- Oil prices fall after Trump said further Iran strikes look unlikely
- US dollar opens with losses across the board
USDCAD open (6:00 am): 1.4084, overnight range 1.4078-1.4132, close 1.4130, WTI $89.46, Gold $4,098.40.
The Canadian dollar recouped Friday’s losses and is consolidating the gains in early NY trading. Nothing in Canada caused the reversal. Traders simply decided the flight to safety, sparked by the tech selloff and the gap between the Canadian and US jobs reports, had gone too far. A quarter-point Fed hike in December was already in the price, and the NFP numbers didn’t change that.
The Canadian report was another story. It came in weaker than expected and left plenty of people wondering why BoC Governor Tiff Macklem was in such a hurry to raise rates.
WTI swung through an $87.56-$91.41 band after Trump said further strikes on Iran look unlikely as long as negotiations keep moving.
What a difference a weekend makes. Friday’s nonfarm payrolls report smashed expectations, with 165,000 new jobs against a 65,000 forecast, and the unemployment rate dipped to 4.1%. The greenback had been firming even before the numbers hit, as Thursday’s tech rout spread to defensive sectors and markets around the world. Traders now see an 80% chance the Fed hikes on December 9.
That dollar strength has evaporated this morning. The DXY has slipped back below where it was trading before Friday’s jobs data.
Asian stocks finished mixed. Japan’s Topix soared 2.97%, Australia’s ASX edged up 0.10% and Hong Kong’s Hang Seng dipped 0.13%.
As of 7: 20 am, Germany’s DAX is up 1.00%, France’s CAC-40 has gained 0.72% and the UK FTSE 100 is up 0.68%. S&P 500 futures have risen 0.61% , the 10-year Treasury yield sits at 4.856%, and the DXY is at 101.88.
EURUSD has clawed back all of Friday’s losses within a 1.1135-1.1198 range, though this looks more like profit-taking than a change of heart. The downtrend that has been in place for a month stays intact as long as the pair is below 1.1250. A dip in Sentix investor confidence to 2.4 from 2.7 helped cap the euro’s gains, even as German exports jumped 2.0% m/m in September, well ahead of the 0.5% forecast.
GBPUSD is edging higher in a 1.3346-1.3426 band and has erased Friday’s losses in a sleepy session. Sterling is still drawing support from last week’s hawkish Bank of England meeting, where external MPC member Catherine Mann pushed for a half-point hike. A draft EU-UK agreement to slash red tape in food supply chains gave the pound an added lift.
USDJPY slipped within a 157.88-158.53 range as the US dollar weakened across the board, but strong US data backing a December Fed hike is limiting the downside. Japan’s Ministry of Finance disclosed the details of its three-day intervention between July 30 and August 3. Officials spent 7.98 trillion yen on July 3 and 15.4 trillion in total over the three days, and none of it made a dent in the yield gap between JGBs and US Treasuries.
AUDUSD tracked the other majors higher in a 0.6857-0.6906 range, although a dovish RBA outlook is keeping a lid on gains. Firmer Chinese producer prices offered some support. Across the Tasman, traders were watching the New Zealand election, where preliminary results suggest Prime Minister Luxon will hang on to his job.
Neither Canada nor the US has any meaningful data out today.
