Loonie stalls as Carney cools US trade deal hopes, yen eyes BoJ

The Canadian dollar lost momentum after a seven-day rally as Prime Minister Mark Carney said Canada "has not budged" in trade talks with Washington. In Asia, Japan's services inflation held steady, keeping the yen's focus squarely on Friday's Bank of Japan decision.

What moved and why

The loonie had some deal optimism priced in. A Reuters report, relayed by investingLive, cited two Canadian and four American sources saying the two sides are discussing lower tariffs on autos and steel. investingLive urged caution, comparing the flow of trade-deal reports to repeated claims of "peace in Hormuz".

Carney's comments then took some of that support away. According to investingLive, his remarks and a Semafor report suggest a deal is less imminent than claimed, leaving USD/CAD sensitive to further trade headlines. Investing.com reports the Canadian dollar steadied after its seven-day run ahead of rate decisions. The USD/CAD fixing rose back above 1.40 on Monday. Chart: USD/CAD.

Risk appetite improved in US hours. investingLive's Americas wrap says US stocks climbed as Anthropic filed for an IPO, and notes a report that Saudi Arabia offered cash to the Houthis to stop attacks. Investing.com reports US yields hovering near three-week lows ahead of the Fed decision.

The majors

ECB reference rates from the fixing of 26 October, compared with the 23 October fixing. These are official daily fixings, not live quotes.

The dollar firmed against the yen, franc and loonie in the fixing, in line with Investing.com's report of a dollar rebound as the euro slipped ahead of key central bank decisions. The Mexican peso was the standout gainer. For a beginner's look at what the USD/JPY move means in pips, see this explainer on the 65-pip USD/JPY fixing gain.

Central banks and data in the news

Bank of Japan

Japan's September services PPI held at 3.7% year on year, in line with forecasts, investingLive reports. The outlet says the print removes one possible dovish surprise before Friday and keeps the backdrop supportive of December hike pricing. It adds that steady services inflation strengthens the case for the Outlook Report to effectively declare underlying inflation has reached 2%, which it says would support the yen.

Reserve Bank of Australia

Ahead of Australia's CPI, banks expect a 1.0% rise in core inflation, above the RBA's 0.8% forecast, according to investingLive. With implied November hike odds already above half, it sees a trimmed mean at or above 1.0% pushing pricing closer to fully priced, while 0.9% or lower could unwind it quickly.

Fed and inflation

Goldman Sachs estimates the AI buildout could add up to 50 basis points to US core PCE, though the boost is temporary, investingLive reports. The outlet says this argues against easing for central banks on tightening paths, including the Fed and the BoJ.

Trade

US Trade Representative Greer warned that a $3.4 billion EU loan to Airbus may breach the US-EU aircraft trade truce, per investingLive, which calls it a warning shot rather than an escalation.

What to watch next

• Australia CPI: the core reading against banks' 1.0% estimate and the RBA's 0.8%.
• Fed decision: US yields sit near three-week lows going in, per Investing.com.
• Canadian rate decision and trade talks: any concrete US-Canada tariff news for USD/CAD.
• BoJ on Friday: whether the Outlook Report signals underlying inflation at 2%.
• US-EU aircraft dispute: any move from warnings to formal measures.