Most currencies are stuck waiting for Wednesday's flash PMIs and this week's Trump-Xi summit, but Brent crude and two commodity-linked currencies already have their own stories. Brent has fallen to an 11-day low near $100 despite fresh Houthi attacks on Saudi Arabia, while the Australian dollar firms on a converging rate-hike call and the Canadian dollar slides with oil.
The Dollar Index is holding around 100.22, with its post-FOMC advance losing momentum as traders wait on this week's diplomatic and data catalysts. Brent and two currencies, however, are already moving on catalysts of their own.
Trump and Xi meet as trade and AI take center stage
Chinese President Xi Jinping will make a state visit to the United States from September 23 to 25, with his main meeting with President Trump set for Thursday in Washington. It marks Xi's first US state visit in more than a decade and the second summit between the two leaders this year, following Trump's May trip to Beijing.
Trade remains central to the agenda, particularly the existing tariff truce and China's rare-earth exports, and artificial intelligence has emerged as another substantive topic. US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng held preparatory talks in New York on Sunday, where the US proposed an AI dialogue and notification mechanism for major AI-related national-security incidents. The two sides also discussed possible tariff reductions on a limited group of non-sensitive goods, though Reuters reported no progress on several larger trade issues.
Brent nears $100 despite fresh Saudi attacks
Oil is sending a clearer signal than the rest of the market. Houthi attacks targeted Riyadh and Saudi Aramco's Yanbu facility over the weekend, yet Brent still fell to an 11-day low near $100, touching around $100.20 at one stage Monday. Traders are instead weighting the supply-response and diplomatic channels more heavily: Saudi exports recovered to just over 4 million barrels per day so far in September, while ship-to-ship transfers near Oman have risen materially as producers adjust to regional disruption.
AUD firms as Australia's big four banks converge on a hike
The Australian dollar has a domestic catalyst of its own. CBA and ANZ joined Westpac and NAB on Monday in forecasting a 25bp RBA hike to 4.60% at the September 28-29 meeting, following Governor Michele Bullock's hawkish September 18 testimony, in which she said some upside risks to inflation appeared to be materialising. ANZ goes further, retaining a further November rate hike in its forecast.
CAD tracks oil in the opposite direction
The Canadian dollar is moving the other way, losing commodity support as Brent falls and compounding an existing US-Canada bond yield-gap vulnerability that had already pushed the currency near its weakest levels since early August. As a result, CAD has become a fairly direct FX expression of the market's willingness to price out some of the Middle East energy premium.
Tuesday's Trump-Gulf meeting gives oil its first diplomatic test. Wednesday brings flash PMIs alongside Xi's arrival in Washington, and Thursday's Trump-Xi meeting follows. Brent's $100-100.26 support zone, though, does not have to wait for the calendar to move.
Source: ActionForex
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