The U.S. dollar is holding firm in early trading even as markets now price in an 81% chance of a Federal Reserve rate cut in December. Year-end flows are helping keep the dollar supported near the 100 level. Analysts caution that the USD may look slightly overvalued if the Fed continues to lean more dovish through the end of the year.
U.S. equity markets rallied yesterday on strong performance from major tech names, but futures are softer this morning as traders await key economic releases. Today’s data — ADP Employment, PPI excluding food and energy, Retail Sales, and Consumer Confidence — could influence the next move in the dollar and shape expectations ahead of the Fed’s December meeting.
CAD: Loonie Under Pressure as Oil Declines
The Canadian dollar is softer this morning, with falling oil prices continuing to weigh on the currency. USDCAD remains strong, and direction could shift depending on today’s U.S. economic data and Friday’s Canadian GDP report. The market remains cautious ahead of both releases.
EURCAD: Higher on CAD Weakness
EURCAD is moving higher as the euro benefits from continued weakness in the Loonie. Germany’s GDP numbers were in line with expectations, creating no significant volatility and leaving the pair driven mostly by CAD sentiment.
EURUSD: Steady Ahead of U.S. Data
The euro is holding steady against the dollar as markets await U.S. Retail Sales and PPI to determine whether the pair can break out of its recent range. The USD remains slightly softer following recent dovish signals from the Federal Reserve.
GBP: Firm but Limited by UK Uncertainty
The British pound is firm versus the U.S. dollar, supported by the softer Fed tone. However, upside remains capped by ongoing UK fiscal uncertainty and weak domestic data. Sterling is expected to react closely to U.S. releases today, with broader movement still tied to dollar momentum and Bank of England expectations.
