Baystreet.ca - - Global markets are uneventful due to US Thanksgiving.
- Mexican peso soars after positive Trump tweet.
- US dollar trading somewhat defensively due to month end.
USDCAD: open 1.4005, overnight range,1.3999-1.4032, close 1.4030, WTI $69.24, Gold, $2647.56
The Canadian dollar is consolidating yesterday’s gains after an uneventful overnight session. US markets are closed today for the Thanksgiving holiday, and only skeleton crews will be working on Friday. The absence of American traders provides a convenient excuse for traders elsewhere to take it easy.
The Canadian dollar is getting a modest boost from month-end portfolio rebalancing flows. The S&P 500 index gained 4.7% as of Wednesday, suggesting portfolio managers may need to buy Canadian dollars to adjust their portfolios. However, the US holiday likely means these rebalancing flows could be spread out and continue into next week.
The Canadian rally does not appear sustainable in light of Trump’s threat to impose a 25% tariff on all goods coming from Canada. The incoming president is reportedly frustrated by what he perceives as the Canadian government’s indifference to a "porous border," which he claims allows drugs and illegal immigrants to flow into the US.
WTI oil prices are fluctuating in a $68.28–$69.30 range, with a bounce from the lows occurring after Israel accused Hezbollah of violating the ceasefire agreement.
The US dollar remains mostly unchanged in early trading, and the 10-year Treasury yield is steady at 4.262%. Asian equity indices saw gains, with Australia’s ASX 200 up 0.45%. European markets are also in positive territory but off their best levels, led by a 0.68% increase in Germany’s DAX. Meanwhile, US S&P 500 futures have edged up by 0.15%. Gold prices inched higher, climbing from 2621.02 yesterday to 2647.10 today.
EURUSD held within a 1.0528-1.0570 range, consolidating gains driven by comments from ECB policymaker Isabel Schnabel, who hinted at a slower pace of rate cuts than markets expect. The EU’s economic sentiment report for November showed stability but had minimal impact on trading.
GBPUSD traded in a narrow 1.2645-1.2683 range amid quiet markets due to the US holiday and a lack of domestic data. Month-end US dollar selling and EURGBP pressures related to French political tensions provided mild support.
USDJPY climbed overnight, rising from 150.93 to 151.99, as traders anticipate a potential Bank of Japan rate hike in December. Month-end dollar selling and subdued Treasury yields added to the upward momentum.
AUDUSD flitted between 0.6476 and 0.6510. Traders dismissed stronger-than-expected Q3 Capital Expenditure data, which came in at 1.1% versus the forecast of 0.9% and ignored RBA Governor Michelle Bullock’s remarks about persistent inflation keeping rates elevated.
There are no US or Canadian economic reports today.