Canadian Dollar Update – Canadian dollar sliding lower

• Trump ‘s UN speech raises tensions with Russia
• Fed Chair Powell reiterates that inflation risks tilted to the upside
• US dollar catches a bid and recoups recent losses

USDCAD open 1.3870, overnight range 1.3838-1.3879, close, 1.3837, WTI 63.79, Gold 3767.82

The Canadian dollar is being undermined by broad US dollar demand and Bank of Canada Governor Tiff Macklem’s bleak assessment of the domestic economy.

Macklem warned that tariffs are permanently eroding growth by denting exports and stifling job creation, a view that reinforces expectations for another rate cut on October 29.

WTI crude traded with a firmer tone, moving between 63.26 and 64.19. The lift came from a combination of escalating friction between Trump and Putin in the aftermath of Trump’s UN address and persistently tight global inventories.

Jerome Powell, meanwhile, noted that the US economy remained resilient though growth had slowed since the start of the year. He argued that the inflationary push from tariffs should prove temporary, though he admitted that near-term risks tilted higher. His remarks did nothing to shift market expectations for another 25-basis-point cut on October 29.

Asian equity markets ignored Wall Street’s losses and pushed higher. Japan’s Topix added 0.23%, the battered Hang Seng climbed 1.37%, while Australia’s ASX 200 dropped 0.92% after hotter-than-expected inflation.

By 7:30 a.m. EDT, European bourses were weaker with the CAC 40 down 0.45%, the DAX off 0.10%, and the FTSE 100 lower by 0.13%. US futures pointed modestly higher with the S&P 500 up 0.19%. The dollar index traded at 97.73 within a 97.33–97.75 overnight band. Gold sat at $3,764.86, and the 10-year Treasury yield was 4.119%.

EURUSD climbed defensively within 1.1755–1.1820 after another poor German Ifo survey undercut the slight optimism from Tuesday’s PMI data. The Ifo report said sentiment deteriorated further, with the Business Climate Index dropping to 87.7 in September from 88.9.

GBPUSD traded at the bottom of its 1.3470–1.3529 band, weighed down by broad US dollar strength and a grim outlook from the OECD, which projected the UK would suffer the highest inflation in the G7 and sluggish growth due to tighter fiscal policy.

USDJPY bounced in a 147.52 and 148.40 band after a disappointing manufacturing PMI which fell to 48.4 from 49.7 in August, though the composite reading slipped only modestly to 51.1 from 52. Gains remained capped by persistent concerns the Bank of Japan could raise rates before year-end.

AUDUSD recovered from an Asian low of 0.6589 to reach 0.6606 in Europe before fading in New York. The rally drew a bit of support from data showing inflation rose to 3.0% in August, up from 2.8% in July.

Today’s US data includes New Home Sales. The Canadian calendar is empty.