– JOLTS data on tap.
– Fed rate cut odds rise to 72%.
– US dollar opens modestly softer after quiet session overnight.
USDCAD: open 1 .4038, overnight range,1.3991-1.4049, close 1.4027, WTI $68.69, Gold, $2642.90
The Canadian dollar is drifting aimlessly but remains within its well-defined, post-Trump election range. It is primarily a US dollar story, as many analysts and economists expect the US dollar to rise in Q1 2025 with Trump taking over the White House.
Mr. Trump is a big fan of tariffs and likes to use the lure of approximately 350 million American consumers to pressure other countries into compliance with his wishes. It is working. Canada’s Prime Minister, Justin Trudeau, travelled to Florida after Trump threatened 25% tariffs on all Canadian imports. Trudeau was not alone. A gaggle of other foreign leaders and company CEOs have been attempting to curry favor with the next President of the United States.
The BRICS leaders (Brazil, Russia, India, China, South Africa) are not part of this group. They face 100% tariffs after threatening Trump with plans for an alternative currency to displace the US dollar.
It is a light day for economic data, with only the US JOLTS job openings survey on the agenda. The report is expected to show an increase in job openings in October. However, as long as the results remain below 8.0 million, the Fed should stay on track to cut rates.
Yesterday, New York Fed President John Williams suggested that a December rate cut was possible but emphasized it was still data-dependent. His colleagues, Christopher Waller and Raphael Bostic, echoed this sentiment. That same view is likely to be repeated today when Chicago Fed President Austan Goolsbee and San Francisco Fed President Mary Daly speak
EURUSD advanced from 1.0480 to 1.0531, but its upward momentum was capped due to political uncertainties in France. Prime Minister Michel Barnier faces a looming no-confidence vote over his budget, with his position unlikely to hold beyond Wednesday. The absence of new elections until at least July 2025 adds further pressure, keeping EURUSD vulnerable.
GBPUSD held within its 1.2639-1.2698 range, supported by selling pressure on EURGBP stemming from France’s political struggles. Meanwhile, UK retail data disappointed as BRC Like-for-like Retail Sales dropped 3.4% in November, a stark contrast to the 0.3% growth recorded in October.
USDJPY traded within a narrow band of 149.50-150.75, with movement constrained by expectations for a potential rate hike by the Bank of Japan and rising yields on U.S. 10-year Treasury notes.
AUDUSD fluctuated between 0.6455 and 0.6505, recovering some of its losses from earlier in the week. The U.S. dollar maintained strength, bolstered by expectations of policy shifts under a Trump administration and concerns over political instability in France, which added a slight risk aversion bid. Traders are now focused on upcoming Australian GDP and PMI data for further direction.
NZDUSD followed a similar pattern to AUDUSD, trading within a 0.5865-0.5905 range as it mirrored the broader movements driven by dollar strength and international factors.