– Risk sentiment improves modestly on talk of more Chinese rate cuts.
– Global equities grinding out gains.
– USD slightly lower, CAD underperforms.
USDCAD: : open: 1.3599-03, overnight range: 1.3587-1.3619, close 1.3596, WTI %80.64, Gold $1924.27
The Canadian dollar is the laggard today after an unexciting and tame overnight session. The antipodean currencies (AUD and NZD) outperformed, and both opened modestly higher in NY, while the Canadian dollar was flat to lower.
The antipodeans are benefiting from improved risk sentiment stemming from a report in the Chinese press that the PBoC is planning to cut the bank reserve requirement ratio (RRR) before year-end. That news helped boost the Hong Kong Hang Seng index by 1.95% and Australia’s ASX 200 by 0.71%.
However, the stock market rally is likely to be short-lived, especially if this week’s China Manufacturing PMI data is weaker than expected.
The Canadian dollar is also struggling to rally because oil prices are stagnating in a fairly narrow range. West Texas Intermediate traded in a range of $79.78/barrel to $80.84/b overnight. Gains are limited due to China’s sluggish post-COVID economic recovery.
EURUSD traded defensively in a range of 1.0805-1.0839. Traders are cautious ahead of next month’s ECB monetary policy meeting, as the decision appears to be a 50/50 toss-up between a hike or a pause. The German Consumer Sentiment report was negative, with GfK forecasting September’s result at -25.5, down 0.9 points from August.
GBPUSD chopped aimlessly in a range of 1.2596-1.2636 and opened in NY at 1.2610. The prospect of a September Bank of England rate hike and a Fed pause is underpinning prices.
USDJPY drifted in a range of 146.31-146.62. A higher than expected Japanese unemployment rate (actual 2.7% vs forecast 2.5%) did not have any impact on FX trading.
AUDUSD inched higher in a range of 0.6423-0.6456 before giving back the gains in NY. The initial support from talk of additional Chinese monetary stimulus faded, as did the goodwill on news that Australian barley shipments to China have resumed.
Today’s US data includes JOLTS Job Openings, which are expected to dip to $9.465 million from 9.582 million, and August Consumer Confidence.
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