USD - CAD - Canadian dollar trading sideways.
- Access to China rare-earth minerals keeps US at negotiation table.
- Oil prices inch higher on US/China trade talk hopes.
- US dollar opens mixed but with a small bid.
USDCAD: open 1.3700, overnight range 1.3694-1.3729, close 1.3701, WTI 65.44, Gold 3329.74
The Canadian dollar traded sideways and uneventfully overnight. Most traders were sidelined due to events in the US, Day 2 of the China and US trade talks in the UK, and a lack of top-tier US data.
Prime Minister Mark Carney announced plans to increase defence spending to 2.0% of GDP this year, which meant spending an additional $9.7 billion. So far, traders ignored the impact of the increased spending on Canada’s budget deficit.
Traders remain focused on US/China trade talks that are taking place in the UK. Chinese exporters remain squeezed under 30% tariffs for all US-bound shipments—levies that were declared illegal by the Court of International Trade. Washington is appealing the decision, but Beijing’s negotiators may be willing to stall until the appeal is heard. The standoff boils down to leverage: the US needs China’s rare earth exports to keep its defense, automotive, and tech sectors humming, and China needs chips and other US technology.
WTI oil prices have held on to recent gains and traded in a 65.16–65.66 range in anticipation of a China/US trade deal resulting in increased crude demand worldwide.
Asian equity indexes closed on a mixed note. The Hang Seng finished little changed, Australia’s ASX 200 advanced 0.84%, and Japan’s Topix ended flat. European equities were mixed, with the FTSE 100 up 0.41% while Germany’s DAX slipped 0.35%. S&P 500 futures are up 0.10%. Gold drifted up to $3,337.30 and the US 10-year Treasury yield sat at 4.45%.
EURUSD traded in a 1.1373–1.1436 range, showing little reaction to a positive Sentix investor confidence reading (0.2 vs. May’s -8.1). In addition, ECB policymaker Robert Holzmann signaled that further rate cuts could be delayed unless the economic outlook deteriorates.
GBPUSD ranged between 1.3457 and 1.3585, retreating after UK retail sales underwhelmed and then falling further when the labour market report was weaker than expected. The unemployment rate climbed to 4.6%, and job losses hit 109,000.
USDJPY moved within a 144.40–145.29 band. Initial gains, driven by optimism around the US-China talks, faded in Europe. Bank of Japan Governor Kazuo Ueda said rate-cut space is limited even if the economy stalls, though he expects inflation to remain near 2.0%.
AUDUSD chopped in a 0.6490–0.6530 range. NAB business confidence showed modest improvement, but business conditions remained weak. NAB Chief Economist Sally Auld noted that unless conditions recover, confidence is unlikely to improve meaningfully in the months ahead.
The US and Canadian economic calendars are empty.
