– Comments from Fed Vice Chair stoke risk sentiment
– European and German ZEW Survey data boost EURUSD
– US dollar grinds higher overnight
USDCAD snapshot open 1.3271-75, overnight range 1.3252-1.3324, close 1.3316,
WTI $85.06, Gold $1776.78
The Canadian dollar tested both sides of its recent trading range in an
uneventful, but choppy overnight session.
Canadian dollar direction continues to be determined by global risk
sentiment which flipped to mildly positive overnight despite weaker than
expected Chinese economic data.
Chinese Industrial Production ticked down to 5.0% y/y from 6.3%, while
Retail Sales fell 0.5% y/y compared to a 2.5% increase in September. The
news wasn’t a total shock as renewed Covid lockdown measures took a toll.
US President Joe Biden’s meeting with Chinese President Xi Jinping is
thought to be a success, mainly because existing tensions were not inflamed
further. Biden assured Jinping that the US policy was unchanged while
Jinping said he would work for a peaceful reunification of the island.
Traders continued to digest yesterday’s remarks by Fed Vice Chair Lael
Brainard. Ms Brainard suggested the Fed may slow its pace of rate hikes,
starting with a 50 bp hike December 14. She supported her view saying, “By
moving forward at a pace that’s more deliberate, we’ll be able to assess
more data and be better able to adjust the path of rates to bring inflation
down.”
Her comments were not new markets were already pricing in a 50 bp hike in
December. Even so, slowing rate hikes will lead to a “pivot.” Her remarks
gave stock markets a lift, but those gains were erased by the end of the
day.
EURUSD jumped to 1.0437 from 1.0313 when German and Euro zone Economic
Sentiment and Current Situation ZEW Survey results were better than
expected. The German Economic Sentiment increased by 22.5 points to -36.7,
while the economic situation improved by 7.7 points. The results may be
negative but perhaps the worst is over.
GBPUSD rose from 1.1742 to 1.1911 in NY on improved risk sentiment. The UK
employment report was a tad weaker than previously but still very robust.
The intraday GBPUSD technical are bullish and looking for a test of
resistance in the 1.2000 area.
USDJPY traded with a negative bias in a 138.97-140.62 range. Japan’s economy
shrank 0.3% q/q in Q3, and 1.2% y/y due to the global slowdown.
AUDUSD firmed in a 0.6687-0.6768 range. The RBA minutes didn’t offer
anything new and reiterated that a 25-bps hike was warranted due to the lag
effect of higher rates on inflation.
US October PPI Ex-food and Energy data is expected unchanged at 7.2% y/y
• Comments from Fed Vice Chair stoke risk sentiment
• European and German ZEW Survey data boost EURUSD
• US dollar grinds higher overnight
USDCAD snapshot open 1.3271-75, overnight range 1.3252-1.3324, close 1.3316,
WTI $85.06, Gold $1776.78
The Canadian dollar tested both sides of its recent trading range in an
uneventful, but choppy overnight session.
Canadian dollar direction continues to be determined by global risk
sentiment which flipped to mildly positive overnight despite weaker than
expected Chinese economic data.
Chinese Industrial Production ticked down to 5.0% y/y from 6.3%, while
Retail Sales fell 0.5% y/y compared to a 2.5% increase in September. The
news wasn’t a total shock as renewed Covid lockdown measures took a toll.
US President Joe Biden’s meeting with Chinese President Xi Jinping is
thought to be a success, mainly because existing tensions were not inflamed
further. Biden assured Jinping that the US policy was unchanged while
Jinping said he would work for a peaceful reunification of the island.
Traders continued to digest yesterday’s remarks by Fed Vice Chair Lael
Brainard. Ms Brainard suggested the Fed may slow its pace of rate hikes,
starting with a 50 bp hike December 14. She supported her view saying, “By
moving forward at a pace that’s more deliberate, we’ll be able to assess
more data and be better able to adjust the path of rates to bring inflation
down.”
Her comments were not new markets were already pricing in a 50 bp hike in
December. Even so, slowing rate hikes will lead to a “pivot.” Her remarks
gave stock markets a lift, but those gains were erased by the end of the
day.
EURUSD jumped to 1.0437 from 1.0313 when German and Euro zone Economic
Sentiment and Current Situation ZEW Survey results were better than
expected. The German Economic Sentiment increased by 22.5 points to -36.7,
while the economic situation improved by 7.7 points. The results may be
negative but perhaps the worst is over.
GBPUSD rose from 1.1742 to 1.1911 in NY on improved risk sentiment. The UK
employment report was a tad weaker than previously but still very robust.
The intraday GBPUSD technical are bullish and looking for a test of
resistance in the 1.2000 area.
USDJPY traded with a negative bias in a 138.97-140.62 range. Japan’s economy
shrank 0.3% q/q in Q3, and 1.2% y/y due to the global slowdown.
AUDUSD firmed in a 0.6687-0.6768 range. The RBA minutes didn’t offer
anything new and reiterated that a 25-bps hike was warranted due to the lag
effect of higher rates on inflation.
US October PPI Ex-food and Energy data is expected unchanged at 7.2% y/y
V