Aug 20, 2025 (Baystreet.ca via COMTEX) --
- RBNZ surprises with dovish tilt.
- Markets are quiet ahead of FOMC minutes today
- US dollar consolidating yesterdays gains.
USDCAD open 1.3876, overnight range 1.3860-1.3884, close 1.3869, WTI 62.18, Gold 3325.83
The Canadian dollar fell sharply yesterday thanks to a burst of risk aversion which drove safe-haven demand for greenbacks. The catalyst was a steep drop in key US A! stocks. The move was also fueled by position adjustments ahead of the FOMC minutes and caution ahead of Powell's Jackson Hole speech.
Markets are on hold ahead of the release of the FOMC minutes from the July 30 meeting. That was the session when Governors Waller and Bowman broke ranks and pushed for a 25 bp rate cut. Traders will be combing through the minutes for signs of how many others shared their view but wanted to wait for more evidence.
Asian equity markets ended mixed, with optimism around easing China/US trade frictions lifting Chinese and Australian shares. The ASX 200 gained 0.25% and Hong Kong's Hang Seng rose 0.17%, while Japan's Topix slipped 0.57%. As of 7:20 am PDT, European equities were trading cautiously with the DAX down 0.28%, CAC-40 up 0.14%, and FTSE 100 gaining 0.30%. S&P 500 futures are flat, the US 10-year yield sits at 4.30%, gold is at 3329.90, and the DXY is at 98.26 after peaking earlier.
EURUSD traded in a 1.1623-1.1693 range as sharp losses in Nvidia and Palantir sparked risk aversion and broad US dollar buying. The pair rebounded from its Asian trough but gains stalled near 1.1655 after softer-than-expected German producer prices. Meanwhile, ECB President Lagarde urged Europe to expand trade ties with partners outside the US in response to increasingly hostile American trade policies.
GBPUSD traded in a 1.3462-1.3510 band, supported after a dip near 1.3460 held and preserved the August uptrend. The pound was underpinned by firmer inflation data, with headline CPI rising 3.8% y/y in July compared to 3.7% expected and 3.6% in June. Core CPI also rose 3.8% versus 3.7% prior. The figures reinforce the view that the Bank of England will keep its policy rate unchanged at the September 18 meeting.
USDJPY moved lower in a 147.15-147.82 range as the US 10-year yield eased from 4.34% to 4.294%. Domestic data disappointed, with Trump's tariffs hammering exports which fell 2.6% y/y in July after a 0.5% decline in June. The trade surplus also narrowed to ¥117.5 billion from ¥152.1 billion.
AUDUSD traded in a 0.6426-0.6464 range, weighed down by broad US dollar strength and some letdown that the PBoC left rates unchanged.
NZDUSD dropped from 0.5930 yesterday to 0.5815 after the RBNZ delivered a dovish surprise. While the expected 25 bp cut to 3.005 was delivered, two of the six committee members favored a 50 bp move. Governor Hawkesby added to the bearish tone with remarks suggesting further easing lies ahead.
COMTEX_468184512/2559/2025-08-20T10:12:33
