Jun 12, 2025 (Baystreet.ca via COMTEX) --
- Global risk sentiment sours.
- Tame US CPI boosts Fed rate cut hopes
- US dollar sinks on renewed risk aversion
USDCAD: open 1.3648, overnight range 1.3643-1.3676, close 1.3673, WTI 67.16, Gold 3366.64
The Canadian dollar eked out small gains overnight due to a fresh bout of risk aversion washing over markets. That led to US dollar selling against the majors, with the Japanes Yen and Swiss franc being the primary beneficiaries due to their safe-haven status.
The Canadian dollar may have gotten an added boost on speculation that the Mark Carney government may approve additional oil pipelines form Alberta to B.C. and the East coast. Furthermore, the Globe and Mailed reported that Canada and the US were deep in security and trade talks.
Nevertheless, the Canadian dollar move is a US dollar story and that story focused on yesterday's US inflation report. CPI came in slightly below expectations, and that was all markets needed to crank up bets that the Fed will slice its overnight rate by 25 bps to 4.25%. At first, markets cheered the idea that tariffs weren't boosting prices, but that view changed when they realized consumers and business front-loaded purchases ahead of tariffs.
Risk sentiment is negative due to increased Middle East tensions and the lack of data around the supposed China/US tariff deal announced Wednesday. Israel is reportedly planning to bomb Iran's nuclear facilities which underpinned WTI prices.
Wall Street's sour mood carried into Asia, where the Hang Seng dropped 1.36%, Australia's ASX 200 slid 0.31%, and Japan's Topix lost 0.21%. European equities didn't fare any better, with the German DAX falling 1.15% and France's CAC 40 off 0.68%. S&P 500 futures were down 0.57% by early morning, and the U.S. 10-year yield fell from 4.48% to 4.38%. Gold (XAUUSD) climbed to 3376.37.
EURUSD traded in a 1.1485-1.1589 range, getting a strong lift from recent hawkish ECB rhetoric. Officials are pushing back against expectations for further easing, and there's revived chatter about positioning the euro as a reserve currency. The short-term bias remains bullish, but the rally may be running ahead of itself, with consolidation expected around 1.1500-1.1600.
GBPUSD ranged between 1.3523 and 1.3594, keeping a bullish tone despite disappointing April GDP data, which dropped 0.3%. The contraction wasn't a shock--pre-tariff front-loading skewed the numbers. Weak industrial and manufacturing output added to the gloom, but traders shrugged it off.
USDJPY traded in a 143.57-144.57 band, losing ground steadily as safe-haven flows lifted the yen and falling U.S. Treasury yields weighed on the pair. Former BoJ official Takako Masai added to the caution, warning that further domestic rate hikes could be shelved if exports take a tariff hit.
AUDUSD moved between 0.6477 and 0.6519, stuck in a holding pattern. Traders couldn't get excited about dovish Fed pricing because U.S.-China tariff tensions kept weighing on Aussie sentiment.
Traders are awaiting today's weekly jobless claims data (forecast 240,000 vs 247,000 last week) and May Producer Price Index which is expected at 2.6% y/y compared to 2.4% in April.
COMTEX_466310677/2559/2025-06-12T10:58:02
