The dollar is trading on a softer footing against most of its major counterparts after several Federal Reserve officials helped solidify market expectations for a smaller, half-percentage point hike at the December meeting. In separate comments yesterday, San Francisco Fed’s Mary Daly said “I think we can slow down from the 75 at the next meeting” and Cleveland’s Loretta Mester stressed the need to be “mindful” of the risks involved in tightening too much.

Oil prices are holding steady after yesterday’s whiplash-inducing session. Front-month West Texas Intermediate plunged by more than $5 a barrel when the Wall Street Journal claimed Saudi Arabia was discussing an output increase with other producing countries, only to reverse its losses when Energy Minister Prince Abdulaziz bin Salman said “The current cut of 2 million barrels per day by OPEC+ continues until the end of 2023,” while warning that additional reductions were possible. The Iraq, Kuwait, and the United Arab Emirates have since echoed Saudi denials.

To add to the Saudi upsets, the national team beat Messi-led Argentina in this morning’s match, marking one of the most surprising World Cup victories since Cameroon-Argentina in 1990.

Canadian retail sales – out at 8:30 am – likely fell 0.5 percent in September, aligning with an early projection published by Statistics Canada last month. But falling gasoline prices may prove to have been the biggest contributor, with other household spending categories holding steady even as overall economic uncertainty levels increased. An advance estimate for October might bring evidence of growing weakness, but an inflation-fighting ramp ahead of the holiday season – echoing last year’s effort to get ahead of supply chain issues – could see receipts rising more strongly than expected.

Today’s US data calendar is light, with the Richmond Fed’s manufacturing index out at 10:00 am and Fed officials Mester, George, and Bullard scheduled to speak.

A non-event is possible, but volatility might spike after tomorrow’s release of minutes taken during the Fed’s early-November meeting. In a series of interviews and speeches since the meeting, policymakers have helped guide markets into pricing a more gradual and prolonged tightening cycle, but considerable uncertainty remains around where rates will ultimately peak. A more hawkish-than-expected tone could hit liquidity-thinned markets like a frozen turkey dropped into a deep fryer.

Karl Schamotta, Chief Market Strategist