Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.4130 - 1.4380
Euro 1.5820 - 1.6070
Sterling 1.8700 - 1.8950
WTI Oil (opening level) $92.71
The CAD/USD is opening at 1.4258 ( 0.7014)
The US Federal Reserve's hawkish stance, along with elevated US bond yields and geopolitical uncertainties, helps the safe-haven USD to stand firm near an 18-month high. However, the risk of a further escalation of tensions in the Middle East provides a goodish lift to crude oil prices, underpinning the commodity-linked CAD and acting as a headwind for the USD/CAD pair.
Headlines
· The September FOMC minutes showed a unanimous decision to hike 25bp, but a meaningful split over reasons for tightening policy: some officials were focused on preventing supply/energy shocks from unanchoring inflation expectations, while others saw demand-driven inflation as the bigger problem. Most participants still judged that another hike before year-end would likely be appropriate, but there was little sense of urgency around October. Overall, the minutes reinforced a hawkish bias, but with a preference to wait for more data before moving again. US short-dated treasury yields ended the day lower.
· Housing costs kept rising. The 30-year fixed mortgage rate jumped 19 basis points to 7.49% for the week ended 2 October, the highest since November 2023 and a seventh consecutive weekly increase. Mortgage applications fell 4.2%, with purchases down 2.1% and refinancings down 7.5%. The New York Fed's survey showed one-year inflation expectations rising to 3.9% from 3.6%.
Key Points
· Macro: Fed minutes showed unanimous backing for the September hike and mortgage costs kept climbing
· Equities: Wall Street snapped its winning run while European banks and Korean chipmakers fell hardest
· Volatility: Index volatility stayed subdued even as one-day pricing firmed and rates volatility eased
· Digital Assets: Tokens drifted lower and listed crypto proxies fell much harder than the coins
· Commodities: Supply risks underpin oil and copper; gold rebounds after testing key support
· Fixed Income: French debt concerns rebounded sharply. US long-date yields tamed after intraday cycle highs Wednesday.
· Currencies: EUR weakness eased slightly, JPY broadly weak