– US Markets close early today
– FOMC minutes prove to be a non-event
– US dollar a tad softer due to profit-taking.
USDCAD: open 1.4049, overnight range,1.4035-1.4078, close 1.4056, WTI $68.98, Gold, $2648.52
The Canadian dollar is licking its Trump tariff wounds and is trading well above its Tuesday session low. However, it is not the start of a new uptrend but merely consolidation and caution ahead of the U.S. Thanksgiving holiday, which starts with an early close on Wall Street today.
President-elect Trump’s threat to slap a 25% tariff on all Canadian imports has thrown a monkey wrench into the economy, risking the derailment of any hopes for a domestic economic recovery in 2025 while simultaneously adding another layer of risk to the Bank of Canada’s monetary policy deliberations.
The Canadian dollar is expected to trade with a negative bias at least until the Trump inauguration due to the rising risks of a global trade war.
It’s a big day for U.S. economic data as the usual Thursday reports are moved forward. The data includes Q3 GDP (forecast unchanged at 2.8%), Durable Goods Orders (forecast 0.2% in October vs. 0.5% in September), initial jobless claims (217,000), the PCE price index, and many others.
The minutes from the Federal Reserve’s last meeting drew little market attention, as traders are focused on the upcoming December 18 gathering, which will include updated forecasts and the latest dot-plot projections. Concurrently, Donald Trump’s remarks, appointments, and trade-related actions have dominated headlines, overshadowing developments from the Fed.
A ceasefire agreement was reached between Lebanon and Israel, which boosted risk sentiment slightly, but concerns surrounding the incoming Trump administration limited the gains.
EURUSD bounced in a 1.0474–1.0539 band, buoyed slightly by comments from ECB board member Isabel Schnabel. She advocated for a cautious approach to rate reductions, hoping to temper market enthusiasm. Traders are currently anticipating ECB rates to decline from 3.25% to 1.75% by the end of 2025.
GBPUSD drifted in a 1.2567–1.2620 range. The pound found support from a broadly weaker U.S. dollar, softness in EURGBP, and the prospect of steady UK interest rates, which at 4.75% remain higher than those of other G7 nations.
USDJPY slid from 153.24 to 151.22 because of increased speculation that the Bank of Japan may raise rates in December. In addition, the drop in the U.S. 10-year Treasury yield from 4.42% earlier in the week to 4.26% today exacerbated the retreat.
AUDUSD rose from 0.6463 to 0.6501, driven by overall weakness in the U.S. dollar. Australian inflation for October was reported at 2.1%, slightly below the 2.3% forecast. The trimmed mean CPI (Core CPI) climbed to 3.5% year-on-year from 3.2% in September, but the results are not expected to influence the Reserve Bank of Australia’s timeline for rate adjustments, with no cuts anticipated before May 2025.