Jul 30, 2025 (Baystreet.ca via COMTEX) --
- Trump's Canada deadline for tariff deal sinking Canadian dollar.
- FOMC decision could be split
- US dollar rally eases somewhat as Treasury yields slide
USDCAD open 1.3779, overnight range 1.3759-1.3791, close 1.3772, WTI 68.80, Gold 3331.34
The Canadian dollar is soft ahead of rate announcements from both the Bank of Canada and the Federal Reserve. Markets aren't expecting a move from either central bank, but that doesn't mean the meeting is a non-event.
The BoC finds itself in a tough spot thanks to Trump's threat to slap 35% tariffs on non-USMCA Canadian exports starting August 1 unless a new deal is signed. That risk rules out any policy easing today. The BoC's quarterly Monetary Policy Report is also due but the growing trade uncertainty reduces its usefulness.
WTI oil traded between 68.47 and 69.78 as traders digested earlier gains after Trump shortened his ceasefire deadline for Russia to just ten days. Meanwhile, API data showed U.S. crude inventories rose by 1.53 million barrels last week.
Markets were subdued overnight as traders braced for the Fed's latest policy decision. No changes are expected, with rates likely staying at 4.50% for the fifth straight meeting--an outcome sure to anger Trump. Fed officials are more inclined to wait until the September 17 meeting, when they'll have two more jobs reports and updated inflation and housing data, to assess the impact of Trump's tariff storm on the economy.
The real drama today would come if Governors Waller and Bowman break ranks and push for rate cuts. Both are said to be eyeing Powell's chair and may be eager to show they're aligned with Trump's rate-slashing agenda.
Today's FOMC spectacle is likely to eclipse the ADP employment data (forecast 78,000 vs June's -33,000) and second-quarter GDP, projected at 2.4%.
Wall Street closed marginally lower in advance of the Fed, and Asia offered no clear direction. Australia's ASX 200 gained 0.59%, while Japan's Topix rose 0.40%, even as tsunami alerts rang out. Hong Kong's Hang Seng stumbled 1.36%.
Europe offered little excitement. The CAC-40 managed a 0.50% rise, but the DAX was flat and the FTSE 100 dipped 0.25%. S&P 500 futures were flat, with investors awaiting earnings from Meta and Microsoft.
EURUSD traded in a 1.1540-1.1572 range as it marked time following Tuesday's tumble, sparked by a lopsided EU-US trade deal. German Q2 GDP fell 0.1% q/q, but slightly better Eurozone growth (0.1% vs 0.0% expected) and flat Consumer Confidence provided a modest offset. The broader picture remains bearish as long as the Fed stays on hold and US data outpaces the Eurozone.
GBPUSD moved between 1.3342 and 1.3386 overnight, holding firm on the back of EURGBP selling pressure. Support is also coming from the UK's relatively better trade terms with Trump, especially compared to the EU's performance.
USDJPY churned within a 147.81-148.53 range as markets digested a massive 8.8 quake off Russia's Kamchatka Peninsula that set off tsunami warnings across Japan. A dip in 10-year Treasury yields added mild downside pressure ahead of today's Fed decision and tomorrow's Bank of Japan meeting.
AUDUSD slid from 0.6529 to 0.6494 and was sitting on the session low in early New York trading. The pair has been soft since peaking near 0.6624 late last week, with selling pressure intensifying after Australia's Q2 CPI came in below forecast (0.7% q/q vs 0.8% expected, prior 0.9%). Westpac's chief economist Luci Ellis noted the data supports a rate cut from the RBA to 3.60% on August 12.
COMTEX_467673204/2559/2025-07-30T09:42:36
