– ECB expected to cut rates 25 bps today, which is fully priced in.
– European equities and S&P 500 futures trading higher.
– US dollar opens mixed but mostly firmer.
USDCAD: open 1.3782, overnight range 1.3747-1.3786, close 1.3753, WTI $70.67, Gold, $2679.27
The Canadian dollar enjoyed an uneventful overnight session with traders hoping today’s US economic data provides fresh direction- and there is plenty of data. Retail Sales (forecast 0.3%, August 0.1% m/m), Philadelphia Fed Manufacturing survey (forecast 3, September 1.7), and weekly jobless claims (forecast 260,000, previous 258,000) are released at 8:30 am, while Industrial Production, Capacity Utilization, and Business Inventories data are out at 10:00 am.
Asian equities closed with losses across the board except for the Australian ASX 200 which gained 0.86%. The biggest loser was the Shanghai Shenzhen CSI 300 index which dropped 1.13% mainly on the back of another disappointing stimulus briefing. Chinese authorities did not back up their words with hard dollar stimulus.
EURUSD is showing strength ahead of the ECB meeting, trading close to the upper end of its overnight range of 1.0848-1.0871. A 25-basis point ECB rate cut is already priced in, along with four additional 25-point cuts at upcoming meetings. This suggests EURUSD could rise further unless President Christine Lagarde delivers a more dovish message than anticipated during her press conference.
GBPUSD is currently holding steady within the 1.2974-1.3005 range, consolidating the losses from the previous session. Expectations of two 25-basis point rate cuts by the BoE, following a softer inflation report, are keeping the pair’s gains in check.
USDJPY flitted between 149.24 and 149.88 overnight, and it is trading near where it ended yesterday in New York. The lower end of the range was reached during the Asian session after Japanese trade data revealed a 1.7% drop in exports, compared to a 5.5% increase in August.
AUDUSD moved higher from 0.6660 to 0.6711, boosted by a stronger-than-expected employment report, which has likely taken a 2024 rate cut off the table. Australia added 64,100 jobs, far exceeding the forecast of 25,000, while the unemployment rate remained at 4.1%. However, gains were limited after NAB Business Confidence fell to -6 from -2.
The Canadian data calendar is empty.
