CAD: Trump ends negotiations with Canada – ING

FXStreet Insights Team FXStreet

The Loonie came under some pressure overnight after Trump announced he’s ending all trade negotiations as retaliation for an Ontario-sponsored anti-tariff ad, ING's FX analyst Francesco Pesole notes.

USD/CAD faces upside risks in the near term

"Some might be surprised by the relatively small (0.2%) jump in USD/CAD on the news, but in reality there had been little to no progress on US-Canada trade talks so far, and the pair was already trading at over 2% short-term overvaluation (in our short-term fair value estimate) before Trump’s post."

"But if anything, we think that this development slightly increases the chance of another Bank of Canada rate cut next week. We expect a 25bp reduction, broadly in line with consensus and market pricing (18bp), as trade uncertainty and existing US tariffs are weighing heavily on Canadian businesses’ investment and hiring plans. The worrisome picture for activity and jobs should, in our view, prevail over hotter-than-expected September inflation numbers and convince the BoC to cut again."

"We also think it’ll be hard for the BoC to close the door on more easing already, which should keep the Canadian dollar weak in the crosses. USD/CAD faces upside risks in the near term, where explorations above 1.410 remain very much possible. But by year-end, we still think USD weakness can drag the pair back towards 1.38."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD flirts with tops near 1.3470

GBP/USD manages to regain composure and challenge the area of daily highs around 1.3470 on Friday. Cable picks up pace despite marginal gains in the Greenback in a context of swelling geopolitical tensions and rising global oil prices.

EUR/USD trims losses, back above 1.1500

EUR/USD picks up some pace and bouces off earlier lows, reclaiming the 1.1500 threshold and beyond at the end of the week. The pair’s modest pullback follows a persistent risk-averse market mood and renewed buying interest for the US Dollar.

Gold: The $4,000 mark holds the downside for now

Gold faces renewed selling pressure, falling sharply toweard the $4,000 mark per troy ounce as the US Dollar regains momentum. Escalating US-Iran tensions are keeping inflation concerns and expectations of further Fed rate hikes alive, weighing further on the yellow metal.

Bitcoin eyes 50-day EMA breakout, Ethereum consolidates, XRP steadies

Bitcoin, Ethereum, and Ripple trade near key technical levels on Friday as the broader cryptocurrency market pauses following last week's recovery. BTC is approaching the 50-day Exponential Moving Average while ETH continues to consolidate between two major EMAs.

Warsh needs to restore his reputation

We were glad to see our deeply negative reaction to the Warsh press conference was not some personal peculiarity. Just about everybody in the financial press felt the same way. The consensus is building it’s not the Fed in the dog-house but only Warsh. Today the WSJ changed it tune and blasted Warsh—"the honeymoon is already over..”

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.