The Canadian dollar had a bad day yesterday, but it wasn’t alone. US dollar bulls returned with a vengeance and lifted the US dollar index (DXY) from yesterday’s low of 101.03 to 102.20 overnight.
The Canadian dollar also suffered from another drop in crude oil prices. West Texas Intermediate dropped to $69.28/b in Asia before climbing back to $70.87 in NY today. The oil market is torn between demand due to production cuts and escalating Middle East tensions, and a fear that supply will outstrip demand in the first quarter of 2024. OPEC is reportedly concerned about the low prices as well, and there are rumors of an OPEC meeting in early February.
Traders are hoping that today’s FOMC minutes will provide additional clarity around the outlook for US rate cuts. The Summary of Economic Projections suggested rates could fall by 75 bps in 2024, while the market is pricing 150 bps of rate reductions. If traders decide that their view is too aggressive, the US dollar may extend gains, and equities could slide further.
Don't Waste Money With Banks.
Get Exchange Rates Up to 2% Better With KnightsbridgeFX
Asian equity indexes closed with losses across the board, while Japan’s Nikkei 225 was closed. European bourses are sharply lower, led by an 11.53% fall in the French CAC 40 index, while S&P 500 futures are down 0.41%. The US 10-year yield is up 3 bps to 3.98%.
EURUSD started yesterday at 1.1014 and finished at 1.0947. Prices consolidated the losses in a 1.0920-1.0966 band overnight. December’s disappointing unemployment figures from Germany weighed on the single currency, as did weak stock markets.
Similarly, GBPUSD saw a drop from 1.2760 to 1.2620 on Tuesday, then traded cautiously in a 1.2615-1.2653 range overnight. The sell-off was fueled by an increased appetite for US dollars, driven by concerns that expectations for a US rate decrease may be overstated.
USDJPY surged from 141.86 to 142.88, despite a holiday in Japan, supported by the rally in the US 10-year Treasury yield.
AUDUSD traded negatively in a 0.6730 to 0.6771 range due to broad US dollar demand and weaker commodity prices.
Today’s US data includes ISM Manufacturing PMI and JOLTS job openings.
We are built to beat bank exchange rates and save you money
KnightsbridgeFx is registered with FINTRAC, under the MSB registration number M09819788. Like most financial institutions, we are required to validate the identity of all clients. We have strict measures in place to protect your privacy.
Our Offices
Main office (Appointment only)
First Canadian Place
100 King Street West
Suite 5700 Toronto, ON,
M5X 1C7
(416) 479-0834
Toll-Free: 1-877-355-5239
Fax: 1-877-355-5239
All rights reserved. Knightsbridge Foreign Exchange
Currency Exchange Canada.
