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USD / CAD - Canadian dollar catches a bid

Published 2024-09-12, 07:50 a/m
© Reuters.  USD / CAD - Canadian dollar catches a bid
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Baystreet.ca - - ECB rate cut to be followed by cautious guidance.

- US data includes weekly jobless claims and August PPI

- US dollar trading sideways despite improved risk sentiment.

USDCAD: open 1.3571, overnight range 1.3564-1.3586, close 1.3578, WTI $68.64, Gold, $2519.09

The Canadian dollar dropped yesterday after the US inflation report suggested that the Fed would not cut its benchmark rate by 50 bps next week, as many had hoped. The move didn’t last and the Canadian dollar recouped all its losses before the day ended.

Today, the European Central Bank (ECB) takes center stage. They are universally expected to announce at 25 bp rate cut but not offer much in the way of forward guidance. Policymakers want to prevent a steep slid in EURUSD which would occur if they indicated a bias to further easing. Instead, they will try to offset the market pricing a 40% chance of an October rate cut and a 100% chance of a December rate cut by focusing on upside risks to inflation.

Today’s US data includes weekly jobless claims which are expect to rise by 3,000 to 230,000. A sharply higher number would be US dollar negative as it would boost the odds of a 50 bp rate cut, while an result that is as expected or weaker will not have any impact. Neither will the PPI data as inflation is not the issue anymore.

Wall Street closed with big gains for the Nasdaq and that gave Asian equities a lift. Japan’s Nikkei rose 3.41% while Australia’s ASX 200 gained 1.10%. European bourses are all higher led by a 1.16% jump in the German Dax, and S&P 500 futures are only up 0.15%.

WTI oil prices are stable, trading in a 67.25 to 68.66 band. In the short term, prices are supported due to Hurricane Francine causing significant disruptions to Gulf Sea (NYSE:SE) production. However, gains are likely to be capped after yesterday’s API report showed a 0.83 million barrel rise in U.S. crude inventories, and by the persistent concerns about weak demand from China.

EURUSD is currently in a holding pattern, trading between 1.1005 and 1.1024. The currency faced downward pressure after U.S. inflation data yesterday nearly wiped out the chances of a 50-point Fed rate cut.

GBPUSD traded in a 1.3032-1.3060 range Gains were limited due to yesterdays weak UK economic data, including flat GDP for July and soft Manufacturing and Industrial Production figures.

USDJPY rallied in a 142.24-143.04 range and appeared to ignore remarks from Bank of Japan policymaker Naoki Tamura who advocated for raising rates to 1.0%.

AUDUSD traded higher between 0.6656 and 0.6695, buoyed by improved risk sentiment.

This content was originally published on Baystreet.ca

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