– Lack of actionable data leaves markets vulnerable to headlines.
– Oil prices retreat from earlier peak
– US dollar is on the defensive-CAD underperforms.
USDCAD: open 1.3913, overnight range 1.3902-1.3941 close 1.3938, WTI 62.89, Gold 3231.77
The Canadian dollar reversed its losses yesterday after the U.S. inflation number was a tick lower than expected, which sparked a broad-based U.S. dollar sell-off vs. the majors. The Canadian dollar went along for the ride. Nevertheless, the U.S. inflation numbers were not weak.
U.S. inflation ticked higher in April on a monthly basis, while core annual inflation held steady. The numbers didn’t capture the effects of Trump’s tariff barrage, but that didn’t stop him from spinning. He tweeted: “No Inflation, and Prices of Gasoline, Energy, Groceries, and practically everything else, are DOWN!!! THE FED must lower the RATE, like Europe and China have done. What is wrong with Too Late Powell? Not fair to America, which is ready to blossom? Just let it all happen, it will be a beautiful thing!” Powell may respond to that sentiment when he speaks this morning.
Asia equity indexes wrapped with mixed results. Australia’s ASX 200 inched up 0.13%, Japan’s Topix shed 0.32%, and Hong Kong’s Hang Seng surged 2.30%. European markets are under pressure but off their worst levels. The French CAC 40 is down 0.45%, and the Dax has fallen by 0.34%. S&P 500 futures recouped earlier losses and are up 0.26%. The U.S. 10-year Treasury yield is steady at 4.46%.
EURUSD traded in a 1.1180–1.1266 range, but further upside may be limited. U.S. Treasury Secretary Scott Bessent warned that upcoming tariff talks with the EU won’t be easy, while UK talks are over, suggesting EURGBP selling risks remain. Diverging central bank paths—Fed on pause, ECB easing—add weight to the bearish technical outlook below 1.1300.
GBPUSD consolidated yesterday’s gains in a 1.3291–1.3361 band, with prices getting additional support from hawkish remarks by BoE’s Catherine Mann. She said she won’t back rate cuts until labor and inflation data show more deterioration. Technicals lean bullish, and a break above 1.3360 would target 1.3450.
USDJPY is choppy in a 145.62–147.67 range, with downside pressures stemming from broad dollar selling. April’s PPI print dropped to 0.2% m/m and 4.0% y/y, making rate hikes an even harder sell.
AUDUSD traded in a 0.6464–0.6502 range and extended gains as easing China/U.S. tensions and soft U.S. inflation data encouraged fresh U.S. dollar selling. Aussie bulls also found support in wage data showing Q1 pay up 0.9% q/q and 3.4% y/y, reducing the likelihood of a rate cut by the RBA next week.
There are no top-tier U.S. and Canadian economic data today.