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The start of the trading week has not been particularly favorable for the Canadian dollar. Over the last two trading sessions, USD/CAD has gained more than 0.6% in favor of the U.S. dollar, reflecting a loss of momentum for the CAD in the short term.
The Canadian dollar fell after soft inflation, fresh US tariff threats and easing Middle East tensions lifted USD/CAD towards the 2025 high.
The US dollar and financial markets will face a busy week ahead. We will maintain a largely bearish dollar forecast but the greenback’s performance will be mixed against different currencies. A potential in-line CPI report should not move the needle much today given the Fed’s focus has shifted to employment now.
It has been a day of heavy selling in the precious metals space, one that was always going to come one of these days given how prices were previously just sky rocketing. Some would argue what took it so long.
The week ahead is set to be a busy one for the earnings calendar, while the macro calendar is again set to be quieter with the ongoing US government shutdown delaying the release of data there. Elsewhere, UK CPI on Wednesday and Global PMIs on Friday should bring about a bit of volatility for European markets. Among the indices to watch is the German DAX index this week, with the release of a few major company results to set the tone, including SAP in mid-week.
The US dollar has sold off on the back of today’s inflation data, which landed pretty much where the market had expected, with tariffs still being quietly swallowed up in corporate profit margins rather than passed on to consumers. That gives the Fed room to respond to softer jobs data and, quite possibly, start trimming interest rates from September.
The US dollar continues to enjoy broad support, keeping the near-term USD/JPY forecast bullish. The Fed’s hawkish tone, combined with stronger-than economic figures, has kept the greenback in demand, ahead of the monthly jobs report on Friday.
The broader gold forecast remains somewhat rangebound, as investor attention turns increasingly towards equities, pushing global indices to fresh record highs.
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The EUR/USD staged a mild bounce on Tuesday’s morning session after falling relatively sharply along with other FX majors on Monday. The slight recovery was initially likely driven by profit taking on long dollar positions given that the greenback was also weaker against other currencies. We saw a surprising weak PPI report which contributed to the dollar’s small pullback.
a hotter US CPI report may cause the EUR/USD forecast to turn a bit more bearish, especially given that the ECB are themselves seen cutting rates further and preparing for negative impact of tariffs – in case of a no-deal.
It’s been a fairly upbeat start to the week for precious metals, with gold pushing higher for the fourth session in a row and silver rising above $39. Although the yellow metal wrapped up last week with a modest 0.5% gain, that was enough to mark its second weekly advance. Silver, for its part, continues to steal the show with multi-year highs.
With inflation data to come from both the UK and US this week, the GBP/USD outlook will be put for a big test.
