– Retail Sales and U of Michigan Consumer Confidence ahead

– UK budget U-turn expected

– US dollar opens mixed after wild Thursday

USDCAD snapshot: open 1.3793-97, overnight range 1.3706-1.3811, close 1.3755, WTI $88.46, Gold $1653.85

The Canadian dollar is just a little worse for wear after a wild ride on Thursday. USDCAD spiked to 1.3976 from 1.3775 in the wake of a hotter than expected US inflation report. CPI rose 8.2% y/y in September, a tick above the 8.1% expected, while core-CPI jumped to 6.6% compared to 6.3% in August.

Then the entire move was reversed and USDCAD plunged to 1.3708 which coincided with a Wall Street equity staging a rally while the US 10-year Treasury yield dropped from 4.03% to 3.89%.

The Canadian dollar range was a tad narrower overnight, but still relatively wide as traders and analysts remain concerned about geopolitical tensions and the outlook for US interest rates.

Asia equity indexes closed sharply higher. Australia’s ASX 200 rose 1.75%, while Japan’s Nikkei 225 index jumped 3.25%. European bourses opened in positive territory and then extended gains with the French CAC index rising 1.38%. S&P 500 futures are a tad less enthusiastic and only 0.26% higher. Meanwhile, gold and WTI oil prices are lower.

WTI oil prices are rangebound in a $85.00-$95.00/b range. Opec production cuts support prices while the risk of a global economic slowdown limits gains.

Canada Manufacturing and Wholesale Sales are due today but not a factor for FX markets.

EURUSD traded in a 0.9720-0.09808 range overnight and is sitting at 0.9740 in NY. Prices are underpinned by hawkish comments from a number of ECB policymakers suggesting rates will rise 75 bps on October 27. However, the 2.25% terminal rate from the ECB staff forecast model is weighing on prices. In addition, the German Finance Minister said the economy is in a recession that started in Q3 and will last three quarters.

GBPUSD traded in a 1.1067-1.1379 range yesterday and a narrower 1.1232-1.1365 range overnight. The currency is supported by reports the Liz Truss government will pull a U-turn on large swath of the previously announced mini budget. Other rumours suggest Liz Truss and Kwasi Kwarteng’s jobs are in jeopardy. The Bank of England’s emergency bond buying program ends today giving rise to questions of “what happens on Monday?”

USDJPY traded in a 146.55-147.78 range since yesterday. BOJ Governor Kuroda repeated that Japan’s economic recovery is slow which necessitates ongoing monetary policy support.

AUDUSD and NZDUSD tracked broad US dollar moves.

US Retail Sales are expected to rise 0.2% m/m compared to 0.3% in August.

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