Canadian Dollar Rally Snapped
The recent Canadian dollar rally has been snapped. Tuesday’s USDCAD move above 1.2505 suggests that a short term bottom is in place at 1.2410 and has opened the door to additional gains toward 1.2700. The Canadian dollar outlook is unchanged. The Bank of Canada is in tightening mode while the Fed is on hold. The Canadian economy is robust, the housing market is strong and oil prices are rising. The recent USDCAD gains may be short lived, especially if Friday’s Canadian employment data surprises to the upside.
Coming up shortly, the Bank of England could cause a ruckus if they raise interest rates., and surprise markets. If not, today may be a quiet trading day despite the weekly jobless claims report, ISM Services PMI and factory orders. That’s because of tomorrows nonfarm payrolls report.
Sterling flat-lined in Asia but came to life in Europe. A tiny upward rise in UK Markit Services PMI (Actual 53.8 vs. forecast 53.6) bumped GBPUSD to 1.3267 from 1.3222. Pre-Bank of England policy meeting jitters drove prices back to 1.3232 in New York trading.
EURUSD reached 1.1906 yesterday, a level last seen in January 2015 and then regrouped in the 1.1850 area. Traders ignored an improvement in Retail Sales and unchanged Markit Services PMI data. The ECB’s Economic Bulletin noted improvements in the economy but reiterated the need for monetary stimulus. It didn’t reveal anything that wasn’t already known.
USDJPY trading was quiet. It traded in a 110.57-110.81 range after trying and failing to break below 109.90, yesterday.
The antipodean currencies were livelier thanks to a couple of economic reports.
The ANZ Commodity Price index dropped to 0.8% in July, well below the 2.1% gain recorded in June. NZDUSD dropped from 0.7429 to 0.7393. Prices recovered somewhat in Europe and Kiwi opened today at 0.7408.
AUDUSD dropped from 0.7967 to 0.7915 when the Trade data disappointed. Australia’s trade surplus narrowed to AUD 856 million in June. That was down from the May when the surplus was AUD 2.02 billion.
FX Ranges for major currency pairs