As we start the last day of what has been a busy week, the USD trades sideways, oil prices come under pressure while equities and treasury yield move lower. As expected, the Fed lowered their key interest rates by 25-bps yesterday. In his statement, Powell said that the risks to the job market and inflation were roughly in balance. As for the results of the election, he commented that it would have a near-term impact on monetary policy. When asked, he reaffirmed that he would end his 4-year term in May of 2026 adding that he would not resign if asked. The President has no authority to remove the Fed chairman a position confirmed by the Senate.
In other news. Russia summons Canadian diplomat over 'false accusations' about sabotage plot following exploding parcels in a logistics depot in Europe. Putin has congratulated Donald Trump on his election victory, calling him a courageous man. Hungary’s Orbán predicts Trump’s administration will end US support for Ukraine. Israel was sending two commercial planes to the Netherlands on Friday to repatriate hundreds of Israeli soccer fans after overnight attacks in the streets of Amsterdam
In currency markets. China kicked off a fresh round of fiscal support for its sputtering economy with a package that eases debt repayment strains for local governments. China’s exports rose 12.7% in October from a year earlier, the fastest monthly growth in more than two years. The increase is attributed to Trump’s pledged to increase tariffs on Chinese imports to 60%. The potential increase in tariffs or tax cuts could lead to inflation (in the U.S.) and therefore higher interest rates could further weaken the JPY according to Tamaki leader of the Democratic Party for the People (opposition party). The AUD (+0.58%) and NZD (+0.30%) are headed for solid weekly gains after a wild ride this week when Donald Trump's U.S. election victory took them to three-month lows before hopes of fresh China stimulus spurred a strong rally.
In commodity markets. The price of oil fell as fears over the impact of Hurricane Rafael on oil & gas infrastructure recedes and market participants assess the new Chinese economic stimulus. In the precious metal markets, gold (-1.7%) is on track for its worst week in over five months. Silver is fairing no better as it fell 1.8%. World food prices reach 18-month high in October, UN says. Western European sowing delays raise fears over wheat crop pushing the price (0.7%) higher.
Current level USD Index 104.502 Unchanged
The USD/CAD gained some ground as we end what has been an eventful week. Market participants are still on the fence as to whether Trump’s sweeping tariffs on imported good (including oil) is rhetoric or will become actual policy.
Current level USDCAD 1.3892 Up 0.22%
The EURCAD is finding some stability after Wednesday’s meltdown. While Wednesday’s move was violent, the currency pair remains in the +/- 1.4900 – 1.5100 range.
Current level EURCAD 1.4986 Up 0.10%
The EUR/USD continues to face some pressure as the Trump victory has improved the long-term outlook. The threat of tariffs on European goods are also causing headache for the EUR.
Current level EURUSD 1.0783 Down 0.19%
The GBPEUR extended their gains after yesterday’s BoE 25-bps rate cuts. Governor Bailey’s stated in the following press conference that the central bank needs to retain a gradual approach to policy easing.
Current level GBPEUR 1.2023 (.8316) Down 0.02%
The GBP/USD faced some headwind despite BoE Bailey’s comments of a gradual approach to easing. Market expects that both the BoE and Fed will cut their key interest rates by 25-bps at their December meeting
Current level GBPUSD 1.2965 Down 0.16%
Other ccy levels vs C$. GBPCAD 1.8012 AUDCAD.9212 CADCHF.6266 CADJPY 110.03 CADTHB 24.48 CADCNY 5.1530 CADNOK 7.8518 CADSEK 7.7187 CADDKK 4.9763 CADZAR 12.6037
Other ccy level vs USD. JPY 154.43 CHF.8708 AUD.6629 NZD.5995 CNY 7.1632 MXN 19.9197 INR 84.3440 PLN 4.0074 CZK 23.379 ZAR 17.5241 ILS 3.7295 AED 3.6729 KWD 0.30653
Other Major X levels. EURCHF.9389 EURJPY 164.37 EURSEK 11.5747 EURNOK 11.7686 GBPCHF 1.1288 EURAUD 1.6266 GBPAUD 1.9557 AUDCHF .5772 AUDJPY 101.03 CHFJPY 174.56
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