The US Dollar (USD) is showing signs of consolidation after a strong rally earlier this week, with price action across most G10 currencies remaining subdued ahead of the North American session on Thursday, note Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret.
Market Snapshot: USD Pauses After Rally
- The USD is consolidating its recent gains as market momentum cools.
- CNH (Chinese Yuan) is leading G10 performance with a 0.3% gain, as Chinese markets reopen following the Golden Week holiday.
- Comments from New York Fed President John Williams reinforced dovish expectations, supporting the outlook for additional rate cuts this year.
- CAD, AUD, CHF, and MXN are flat against the USD, while EUR and GBP are slightly weaker.
Underperformers & Risk Tone
- NZD, NOK, and SEK are modest underperformers in today’s session.
- The FOMC minutes released Wednesday offered a mixed tone, acknowledging downside labor market risks and lingering inflation pressures—yet ultimately supporting a dovish outlook in line with market expectations.
- US equity futures remain buoyant, hitting fresh record highs, while the 10-year Treasury yield is stabilizing just above 4.10%.
Commodities and Risk Assets
- Oil prices continue to consolidate after recent OPEC-driven gains.
- Copper is up nearly 2%, extending its recovery.
- Gold is holding at record highs above $4,000/oz, though the rally appears overextended with RSI at 86, indicating overbought conditions.
Looking Ahead: Fed Speeches & BoC in Focus
- The ongoing US government shutdown continues to delay key data releases, including this week’s jobless claims, adding uncertainty to the economic outlook.
- On the Fed calendar for Thursday are remarks from Chair Powell, as well as appearances from Bowman, Goolsbee, Barr, Kashkari, and Daly.
- Market focus is also turning to the Bank of Canada (BoC), with expectations for policy signals amid a muted trading environment.
