Markets in Motion: CAD Outperforms, Yen Jumps, Euro Struggles

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3640-1.3890

Euro                1.5930-1.6180

Sterling           1.8480-1.8730

WTI Oil (opening level) $64.11

CAD is nosing ahead this morning, extending yesterday’s gains through the upper 1.37s and staking a claim on being one of the better-performing G10 currencies on the week.

Breaking through the support around 1.3750 (40-day MA currently) in the short run would be a more meaningful sign of short-term CAD strength and point to USD/CAD losses extending towards the upper 1.36s—the base of the broader consolidation range in place since early July. Resistance is 1.3800/15.

Headlines

• The US dollar weakened again as it chops back and forth day-to-day, with the Japanese yen broadly stronger on a Bank of Japan board member hawkish comments, with USDJPY near 147.15 this morning after yesterday’s high above 148.00.
• The euro remains under pressure against sterling and the yen as French sovereign debt at the long end of the curve remains under pressure relative to German debt. EURGBP trades near 0.8620 this morning, just above the 0.8600 area which hasn’t fallen since early July. EURJPY dipped below 171.50 again overnight, trading not far from the 171.00 area, which is a three-week low.After a several weeks in a narrow trading zone, EURSEK dipped yesterday to close near 11.10, its lowest close since late June.
•  Nvidia’s shares fell 3% in extended hours even as CEO Jensen Huang said demand is ‘really high’. Instead, investors focused on a growth curve that show signs of flattening after two-year AI boom, that supported global equities on bets that it would continue to bolster technology earnings.
• Bank of Japan board member Nakagawa indicated she supported further rate hikes if conditions allow, although did note uncertainties linked to trade. Tokyo August inflation figures are up in Japan’s Friday session tonight. Market anticipation of a rate hike at the BoJ’s October meeting (defined at 25 basis points) have risen to nearly 50%.

Key Points

• Equities: U.S. eked out new highs as investors positioned for Nvidia; Europe inched up on discretionary strength despite bank downgrades; Asia flat; UK slipped as banks lagged
• Volatility: Vol is still sleepy, curve in mild contango, options point to about a 1% SPX swing
• Digital Assets: Ether and Bitcoin up. Both U.S. spot BTC and ETH ETFs pulled in net inflows.
• Fixed Income: US short yields hit new recent lows. French sovereign yields continue to show strain.
• Currencies: JPY rallies on lower US yields, calm JGB market. EUR broadly weak.
• Commodities: Precious metals supported by Fed independence concerns and lower yields