– Fed Powell preaches patience
– Market focus shifts to US jobs data on Friday.
– US dollar drifts lower in quiet session.
USDCAD: open 1.4059, overnight range,1.4055-1.4080, close 1.4074, WTI $68.83, Gold, $2648.81
The Canadian dollar is going nowhere. The overnight price action mirrored that of yesterday as traders look for fresh catalysts before getting involved. That could be tomorrows US and Canadian employment reports, although the Canadian data will be overshadowed by nonfarm payrolls.
The FOMC goes into its black-out period starting Saturday which means there will not be any comments from Fed officials until December 18. Yesterday, Fed Chair Jerome Powell appeared to downplay any urgency to cut rates after pointing out that the economy was stronger now than what they thought it would be in September. He said. “The good news is that we can afford to be a little more cautious as we try to find a rate-setting that neither spurs nor slows growth.”
San Francisco Fed President Mary Daly seemed to agree. She said ““We do not need to be urgent. There’s no sense of urgency, but we do need to continue to carefully calibrate our policy and make sure it’s in line with the economy we have today and the one we expect to have going forward.”
Those comments were enough to see a bit of profit-taking US dollar selling which is why the greenback opened modestly lower in NY today. Asian equity indexes closed with small gains. Australia’s ASX 200 gained 0.15% and Japan’s Nikkei 225 index rose 0.30%. European bourses have shrugged off French political drama and are slightly higher. The French CAC 40 is up 0.12% while the German Dax is up 0.29%. The UK FTSE 100 is the outlier as it is down 0.16%.
EURUSD rose from 1.0507 to 1.0547 despite the news that French Prime Minister Michel Barnier lost a non-confidence vote. Barnier is expected to resign, but markets had already priced in this outcome, resulting in no major surprises. Retail Sales data, exceeded expectations rising 1.9% y/y versus the forecast of 1.7%, but had little impact on trading.
GBPUSD edged higher, trading in the range of 1.2693-1.2740, as it recouped losses from the prior day caused by dovish remarks from BoE Governor Andrew Bailey. The pair remained closely tied to broader US dollar trends, with gains restricted ahead of the upcoming US nonfarm payrolls report.
USDJPY fluctuated between 149.65 and 150.78, buoyed by Powell’s cautious tone on potential rate cuts and uncertainty over whether the BoJ will raise rates in December.
AUDUSD stayed within a narrow range of 0.6421-0.6453, finding limited support from better-than-expected trade data. However, sentiment around the Australian dollar remained subdued due to disappointing September GDP results.
