– Trump factor continues to fuel US dollar rally.
– Canada inflation data due on Tuesday.
– US dollar consolidating Friday’s rally.
USDCAD: open 1.4089, overnight range,1.4070-1.4103 close 1.4090, WTI $67.47, Gold, $2594.19
The Canadian dollar continued slid rapidly on Friday and consolidated the losses in a quiet overnight session. Traders are moving to the sidelines due to a lack of top tier US and Canadian economic data this week and caution around US election announcements.
Fed officials are another factor driving price action. Richmond Fed President Thomas Barkin expressed caution on inflation direction while saying he they are a long way from knowing what the impact of new tariffs will mean. Chicago Fed President Austan Goolsbee said there was a lot more data ahead before he can decide about a December rate cut. Bank of Boston Fed President Susan Collins said it was too soon to talk about how the election would effect Fed policies.
WTI oil prices traded in a 66.54-67.61 range. Some demand was seen after reports that President Biden will allow Ukraine to use US missiles to strike into Russian territory which risks escalating the conflict. However, oil price gains may be limited due to reduced crude demand from China.
Asian equity markets traded with a mixed tone. Japan’s Nikkei 225 index fell 1.09% while Australia’s ASX 200 squeezed out a 0.18% increase. European stock indexes are in the red except for the UK FTSE 100 index which is up 0.11%. S&P 500 futures are up 0.12% and the US 10-year Treasury yield is 4.48%.
EURUSD traded in a 1.0530-1.0572, with little to drive activity as the region lacked significant economic data releases. While ECB President Christine Lagarde is scheduled to speak later, market attention remains focused on developments in US politics.
GBPUSD drifted in a narrow 1.2610-1.2643 band as market participants looked ahead to Wednesday’s UK inflation report. Analysts are divided over whether further signs of easing inflation would push the Bank of England toward additional rate cuts. Housing market data from Rightmove showed prices declining 1.4% on a monthly basis in November, although they rose by 1.2% compared to the same period last year.
USDJPY started at a session low of 153.84 before surging to 155.14 during early Asian trading, eventually settling into a 154.30-155.12 range in European and early US trading. Comments from BoJ Governor Ueda provided little clarity on the likelihood of a rate hike next month, fueling speculative buying. Adding to the momentum, the US 10-year Treasury yield brushed its recent peak of 4.50%, encouraging traders to shrug off concerns about potential BoJ intervention.
AUDUSD hovered between 0.6440 and 0.6480, continuing its lackluster performance from Friday as traders waited for further clarity on US political developments. Gains in the pair appeared capped by concerns over the potential impact of Trump’s proposed tariffs on China, which could hurt Australian exports.
The US and Canadian economic calendars are empty.