– US PPI ex food and energy forecast 2.7% y/y vs June 3.0%
– WTI oil prices climb on escalating Iran and Israel tensions.
– US dollar opens mixed-Commodity currencies outperform.
USDCAD: open 1.3731, overnight range 1.3727-1.3748, close 1.3744, WTI $79.94, Gold, $2460.70
The Canadian dollar remains stuck in a rut, with the rally that began on August 5 stalling just below key resistance levels. Traders are now awaiting a fresh catalyst, which could come today if this morning’s US PPI data for July is weaker than expected. Producer Prices, excluding Food and Energy, are forecast to have increased by 2.7% year-over-year in July, down from 3.0% in June. If this is confirmed, it would further indicate that the American inflation beast is under control. Consumers seem to concur, as reflected in the New York Fed’s monthly Survey of Consumer Expectations, where three-year inflation expectations fell to 2.3% from 2.9% in June, the lowest since the survey began in June 2013.
West Texas Intermediate (WTI) is trading higher, climbing from 79.31 to 80.14 overnight as concerns over a potential Iranian attack on Israel overshadow worries about an oil surplus in Q3 and Q4. The International Energy Agency (IEA) Oil Market Report released this morning highlighted a smaller-than-expected increase in crude demand, driven by a sluggish Chinese economy. The IEA cautioned that “global inventories could build by an average 860 kb/d next year as non-OPEC+ supply increases of around 1.5 mb/d in 2024 and again in 2025 more than cover expected demand growth.”
EURUSD is trading cautiously within a 1.0913-1.0941 range. Today’s underwhelming German ZEW data dampened sentiment, with the Current Situation index dropping to -77.3 from -68.9 in July and Economic Sentiment plunging to 19.2 from 41.8 in the previous month.
GBPUSD rose from 1.2761 to 1.2813 following a robust employment report but has since retreated to 1.2790 in New York trading. The UK unemployment rate edged up to 4.2% for April-June, slightly below the forecast of 4.5% and down from the previous 4.6%. Average earnings increased by 5.4%, surpassing the expected 4.6% but falling short of the previous 5.7%.
USDJPY is trading near the upper end of its 146.92-147.95 overnight range, supported by fading expectations for additional near-term interest rate hikes. Japan’s parliament has summoned BoJ Governor Kazuo Ueda for a special session next week to discuss the recent rate hike.
AUDUSD advanced overnight, climbing from 0.6579 to 0.6610, pushing prices slightly above yesterday’s New York opening level. The National Australia Bank Business Conditions Index improved to 6 from 4
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