– Oil rally boosts Canadian dollar.
– US data supports Powell’s caution.
– US dollar is bid on geopolitical tensions.
USDCAD: open 1.3489, overnight range 1.3476-1.3498, close 1.3494, WTI $71.84, Gold, $2652.93
The Canadian dollar rallied in tandem with a surge in oil prices yesterday, but further gains may be a struggle depending upon upcoming US economic data.
Yesterday, a stronger-than-expected JOLTS job turnover report crushed speculation that the Fed would trim its benchmark rate by 50 bps, and that news fueled a broad-based US dollar rally. The rally gained momentum on news from continued conflicts in the Middle East.
Oil prices spiked on the news, with WTI rising from a low of 66.58 yesterday to 72.48 this morning on rumors that Israel’s retaliation may include destroying Iranian oil production facilities. WTI held on to the gains even after the Saudi Oil Minister warned OPEC members not to cheat on production quotas or risk oil falling to 50.00/barrel.
The ADP job change report is expected to show that the US created 120,000 new jobs in September, a slight improvement over the 99,000 result seen in August.
EURUSD remained under pressure, fluctuating between 1.1054 and 1.1083, as geopolitical tensions, weak Eurozone data, and speculation of additional ECB rate cuts weighed on the pair. In the short term, the technical outlook for EURUSD is bearish, with key support near 1.1000.
GBPUSD is stabilizing after previous declines, trading within a 1.3260 to 1.3306 range. US economic data from Tuesday reinforced Fed Chair Powell’s suggestion of a slower pace for rate cuts, while the geopolitical situation in the Middle East provided additional support for the US dollar against European currencies. Short-term technical indicators for GBPUSD point to a bearish outlook below 1.3330.
USDJPY moved higher, trading between 143.43 and 144.41, as demand for the safe-haven yen diminished. This shift, along with US economic data, backed a more gradual approach to rate cuts. Japan’s Economy Minister, Ryosei Akazawa, emphasized that the Bank of Japan should prioritize managing the country’s exit from deflation while being cautious about raising interest rates.
AUDUSD recovered from previous losses, rallying from 0.6875 to 0.6916 before settling around 0.6890 in New York trading. The pair benefited from recent fiscal and monetary stimulus measures introduced by China.
There are no Canadian economic reports today.
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