Baystreet.ca - - Fed Chair Powell’s comments may not shed any light on rate outlook.
- US Republican’s sweep Congress
- US dollar opens rises across the board.
USDCAD: open 1.4013, overnight range,1.3970-1.4020 close 1.4002, WTI $68.72, Gold, $2547.56
The Canadian dollar is trading at levels last seen during the 2020 pandemic. This time, it's not supply chain disruptions and city lockdowns dragging the currency lower, but rather Donald Trump’s return to the White House.
Mr. Trump campaigned on tax cuts, higher tariffs, and expelling illegal immigrants. His platform resonated with Americans, and they handed him Congress. He defeated Vice President Kamala Harris in the presidential race, and the Republicans gained control of both the House and Senate.
The Canadian dollar has steadily declined since the November 5 election, joining other major G-10 currencies in a sharp downturn. The loonie faces additional pressure from the widening interest rate differential between Canada and the US, with the CAD/US 10-year spread widening to -115.6 from -89 in just a month.
WTI oil prices remain steady within a 67.92–68.93 range, under pressure as the prospect of new, elevated tariffs on US imports could slow global economic growth, even as OPEC plans to boost production.
Fed Chair Jerome Powell will participate in a panel discussion today, but he's unlikely to offer specific insights into the Fed’s stance on inflationary risks from Trump’s tariffs.
EURUSD dropped from 1.0568 to 1.0497, driven by contrasting Fed and ECB policy outlooks. The threat of US tariffs on eurozone imports adds pressure, alongside bearish technical signals. Weaker-than-expected EU industrial production data has further dampened sentiment.
GBPUSD traded in a 1.2630–1.2717 range, underpinned by broad US dollar strength as traders awaited significant US economic data.
USDJPY rallied from 155.34 to 156.25, propelled by an increase in the US 10-year yield to 4.48% overnight. Support for USDJPY is reinforced by the Bank of Japan’s steady rate policy.
AUDUSD fell from 0.6498 to 0.6453, pressured by US dollar strength and disappointing Australian employment figures. New job creation reached 15,900, below expectations, while the unemployment rate remained steady at 6.1%. Continued concerns over China’s sluggish economic recovery also weighed on AUDUSD.
Today’s US data includes weekly jobless claims and the Producer Price Index, though these figures are likely to remain in Trump’s shadow.