– Opec says it will increase production by another 411k barrels/day in June.
– China, and UK closed for holiday.
– US dollar trading with a neutral bias in thin trading
USDCAD: open 1.3788, overnight range 1.3787-1.3829 close 1.3820, WTI 54.49, Gold 3312.08
The Canadian dollar is trading slideway’s but with a slight bullish bias, despite sharply lower oil prices. The Loonie is benefiting from a better tone to trade negotiations with the White House saying the “framework” for several deals will be announced this week.
At the same time, Trump tweeted “I am authorizing the Department of Commerce, and the United States Trade Representative, to immediately begin the process of instituting a 100% Tariff on any and all Movies coming into our Country that are produced in Foreign Lands. WE WANT MOVIES MADE IN AMERICA, AGAIN!”
Opec and “friends” and announced they would increase crude production by 411,000 barrels/day beginning June 1. The news was not unexpected and with the increased number the cartel has replaced about 40% of its previous 2.2 million barrels of cuts.
Investors are eyeing today’s release of the April US ISM Services report for any signs that tariffs are affecting the broader economy. The more impactful event looms Thursday, when the Fed releases its policy decision. No surprises are expected.
Overnight trading volumes were abnormally low due to the UK and Australian market holidays with Japan’s Topix managing a modest 0.31% increase. European trading was mixed, with the DAX advancing 0.51% and the CAC 40 slipping 0.74%. S&P 500 futures are currently off by 0.86%. Gold surged from 3237.93 to 3313.75, while the US 10-year yield is holding steady around 4.30%.
EURUSD traded in a 1.1296–1.1348 range, gradually climbing in thin market conditions on optimism that trade tensions may ease. However, Friday’s strong US jobs report dampened the odds of a June Fed rate cut, which could limit gains. A drop below 1.1210 would shift the technical outlook sharply bearish.
GBPUSD ranged between 1.3260 and 1.3307, inching upward amid renewed trade optimism, although the move lacked conviction. Markets have already priced in a 25 bp cut from the Bank of England, and attention is shifting to the upcoming Fed announcement.
USDJPY traded defensively in a 143.82–144.99 band, opening near the high and edging lower through the morning session. Japanese markets were thinned by the Children’s Day holiday. Concerns over Japan potentially leveraging its vast holdings of US Treasuries pressured the pair, even as Finance Minister Kato attempted to soften earlier comments.
AUDUSD traded in a 0.6434–0.6494 range, extending gains from late last week. The Aussie got a lift after Prime Minister Anthony Albanese’s party secured a decisive election win, partially driven by anti-Trump sentiment. While markets expect the RBA to lower rates by 25 bps soon, today’s TD Inflation reading jumping to 3.3% y/y from 2.8% may challenge that forecast.
The Canadian economic calendar is empty.