Aug 25, 2025 (Baystreet.ca via COMTEX) --
- Powell pivots and sounds dovish
- UK Markets closed today
- US dollar consolidating Friday's losses
USDCAD open 1.3832, overnight range 1.3821-1.3844, close 1.3829, WTI 63.97, Gold 3368.11
The Canadian dollar pulled back from the brink on Friday. The Loonie appeared ready to fall off a cliff until Fed Chair Powell abandoned his hawkish stance at Jackson Hole and suggested tariff-driven inflation would likely prove "short-lived." Powell's comments sent stocks soaring and knocked the greenback lower across the board. The 10-year Treasury yield plunged from 4.342% to 4.24%.
Then Prime Minister Carney go into the act. On Friday, he said that effective September 1 Canada will remove retaliatory tariffs on US goods not already covered under CUSMA. Duties on US aluminum and steel remain in place. Markets viewed the move as a conciliatory gesture toward Washington, aimed at reviving trade discussions.
WTI oil prices moved within a 63.53-64.19 range and are pressing against the top end of that band in New York trading. Fears of supply disruptions tied to sanctions on Russia and continued Ukrainian strikes on energy infrastructure, along with general US dollar weakness, are underpinning crude.
Fed Chair Powell shifted from being concerned about tariff-driven inflation risks to fears of higher unemployment, especially after the large nonfarm payrolls revisions in July. The shift knocked the US dollar lower and pulled the 10-year Treasury yield down from 4.342% before the speech to 4.242% after. Equities jumped while gold extended gains.
EURUSD consolidated Friday's gains in a 1.1690-1.1730 band. Prices peaked after the German Ifo survey showed a modest improvement in business sentiment, rising to 89.0 from 88.6 previously. However, the current conditions index was softer which underscored the fragility of Germany's recovery. ECB policymaker Ollie Rehn noted inflation was "in a good place" and dismissed the idea of rate cuts just for the sake of insurance.
GBPUSD traded uneventfully in a 1.3489-1.3532 range. UK markets were closed for a holiday. Speculation that the BoE may ease policy more gradually then previously expected and a generally softer US dollar are supporting prices.
USDJPY traded from 146.80 to 147.53 after tumbling from 148.78 on Friday. The drop came as traders digested Powell's pivot toward future easing and Bank of Japan Governor Ueda's hint that rising wages and tight labor conditions could force rate hikes this year.
AUDUSD drifted in a 0.6472-0.6505 range, consolidating after Friday's jump from 0.6415. Traders await the release of the RBA minutes from the August 12 meeting for clues on the policy path, with expectations leaning toward a more aggressive rate-cut cycle in the months ahead.
Today's US releases, including the Chicago Fed National Activity Index, New Home Sales, and the Dallas Fed Manufacturing survey, are unlikely to shift sentiment. Market activity is expected to stay thin as traders take advantage of the final week of summer holidays before schools reopen.
COMTEX_468299877/2559/2025-08-25T09:42:33
