Aug 06, 2025 (Baystreet.ca via COMTEX) --
- Weak US data increases Fed rate cut fever
- Trump promises more Russia sanctions.
- US dollar trading defensively
USDCAD open 1.3769, overnight range 1.3759-1.3780, close 1.3774, WTI 66.16, Gold 3359.20
The Canadian dollar recovered yesterday's losses in the wake of a weaker-than expected US ISM Services report which highlighted a weaker employment picture and rising prices mainly due to Trump's tariffs.
Tariff day arrives tomorrow, and Canadian exports to the U.S. that fall outside the scope of the USMCA will be hit with a 35% duty. Prime Minister Mark Carney pledged $1.2 billion in support for the lumber sector but has remained largely silent on the broader state of Canada-U.S. trade negotiations.
WTI crude has rebounded and is trading near the upper end of its $65.12-$66.34 band. Optimism that Russia might make token gestures to Trump in hopes of dodging harsher sanctions is giving oil prices a lift. Still, the upside appears capped by Trump's warnings of significant tariff hikes on nations continuing to buy Russian oil.
A new wave of Trump tariffs is expected to kick in tomorrow, although last-minute extensions remain a possibility. Swiss President Karin Keller-Sutter was reportedly caught off guard by the announcement of a 39% levy on Swiss exports to the U.S. and has made an uninvited trip to Washington hoping to meet Secretary of State Rubio--or possibly Trump himself.
Asian equity markets closed higher led by Japan's Topix, which climbed 1.02%. Australia's ASX 200 advanced 0.84%, while Hong Kong's Hang Seng was essentially unchanged. European markets are close to flat as of 7:30 am. The FTSE is up 0.12%, the CAC 40 rose 0.17%, and Germany's DAX is down 0.11%. U.S. equity futures are pointing slightly higher, with S&P 500 futures up 0.20%. The 10-year U.S. Treasury yield sits at 4.23%.
EURUSD traded in a 1.1528-1.1607 range and remains well-supported amid increased chatter about potential Fed rate cuts. The euro also found traction from upbeat eurozone retail sales, which rose 0.3% m/m in June after a 0.3% drop in May. That helped counter disappointment from weaker German factory orders, which fell 1.0% m/m.
GBPUSD moved between 1.3282 and 1.3314, shrugging off concerns about the UK's widening fiscal hole, estimated at £50 billion. Traders also brushed aside weaker economic data, including a dip in Construction PMI to 44.2 from 44.8. Markets are widely anticipating a Bank of England rate cut tomorrow.
USDJPY drifted in a 147.31-147.89 band, weighed down by general U.S. Dollar softness and easing Treasury yields. Japan's latest labor cash earnings rose 2.5% y/y, below the 3.2% forecast but higher than the previous 1.0%, leaving the door ajar for a possible rate hike by the Bank of Japan.
AUDUSD firmed inside a 0.6466-0.6500 range, buoyed by rising expectations of Fed policy easing. Domestic data was ignored, including a sharp drop in the AiG PMI to -23.9 from -20.0 and a modest recovery in Construction PMI to -1.3 from -14.9.
There's little in the way of market-moving economic data today, but a trio of Fed officials--Boston's Susan Collins, Governor Lisa Cook, and San Francisco's Mary Daly--are all scheduled to speak, with markets watching for any fresh clues on the likely timing of the next rate cut.
COMTEX_467834464/2559/2025-08-06T09:57:49
