Bank of Canada Rate Cut
Yesterday the Bank of Canada (BoC) cut interest rates by 25 basis points, bringing the policy rate to 4.25%. This marks the third cut this year, as the central bank aims to ease inflation and address rising unemployment. The BoC is likely to continue reducing rates. With projections suggesting a drop to around 3% by mid-2025(Yahoo Finance)(TD Stories).
Key Data Today
- Australia’s Trade Balance for July showed a strong surplus of A$6.009 billion. Exceeding forecasts of A$5.0 billion, suggesting a healthy export market(ING Think).
- Later today, the U.S. ISM Services PMI for August will be released, with a consensus of 51.1 compared to the previous 51.4. This will give further insight into the health of the U.S. services sector(Yahoo Finance).
Major Currency Pairs
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EUR/USD is trading at 1.1083, showing slight strength. The euro remains steady as markets focus on upcoming U.S. data and Eurozone stability.
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GBP/USD: At 1.3153, the pound is finding some strength, but is still struggling due to a mix of factors like political uncertainty and high inflation. On the U.S. side, the recent softness in the dollar has helped the pound. Traders will be watching U.S. jobs data closely as they impact near-term movement.
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USD/JPY: Currently at 143.25, the yen has seen a bit of recovery due to a weaker dollar. But the pair remains in a broader uptrend due to the Bank of Japan’s commitment to maintaining ultra-loose monetary policy. Traders are cautious, as there is a growing possibility of government intervention to prevent further yen weakness. (Yahoo Finance).
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AUD/USD: Trading at 0.6725, the Australian dollar has gained on the back of better-than-expected trade balance data. However, the Aussie faces external headwinds from China’s economic slowdown, which has weighed on commodity-linked currencies like the AUD. A recovery in Chinese demand could help push the AUD higher, but concerns about global growth still cap gains.
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NZD/USD: At 0.6205, the Kiwi dollar is supported by improvements in risk factors but remains under pressure due to a softer domestic economy compared to Australia. The currency’s performance is also tied to commodity prices, which have been volatile in recent weeks.
Commodities
- Crude Oil (WTI) prices are currently at $69.48 per barrel, up 0.32% for the day, but down 8.43% for the week. Brent crude is at $73.03, increasing 0.42%, though weekly and monthly trends are still negative(Yahoo Finance).
- Gold is trading at $2,503 per ounce, gaining 0.29% as investors seek safe-haven assets amidst global economic concerns(Yahoo Finance).
Political News
In the U.K., ongoing discussions about housing and legislative reforms continue to dominate headlines, while in the U.S., anticipation builds for tomorrow’s non-farm payroll report, which could shape Federal Reserve policy decisions moving forward.