Canadian Dollar Sidelined

The Canadian dollar was sidelined.  FX markets were a lot livelier than they have been in recent days.  However, the Canadian dollar didn’t join the party.  USDCAD languished within a 1.2665-95 band in Asia and Europe.  Traders concentrated on the rest of the FX majors with an emphasis on the Japanese yen and Swiss franc.

Risk aversion was the them in early Asia markets.  USDJPY declined from 110.35 to 109.66 after President Trump escalated tensions with North Korea.  Mr. Trump threatened Pyongyang with “fire and fury” in response to a series of threats from the North Korea leader.

The Swiss franc was the other major beneficiary of the safe-haven flows.  USDCHF dropped from 0.9765 yesterday morning to 0.9613 overnight.  It has since bounced to 0.9740.

The geopolitical drama wasn’t the only diversion for traders.  China inflation data disappointed.  China July CPI was 0.1%, slightly below the 0.2% that was predicted.

Weaker than expected Australia Consumer Confidence data and the soft China inflation report drove AUDUSD from 0.7914 to 0.7856 in Asia.  Prices bounced from there an AUDUSD opened in New York at 0.7889.

The China CPI data undermined NZDUSD early but it fully recovered its losses by the New York open.

There wasn’t much in the way of economic data in Europe, leaving traders there to dwell on the US/NK war of words.  EURUSD struggled to rally and traded in a 1.1720-1.1763 range.  It opened in New York at 1.1740.

Sterling was in its own world.  GBPUSD made the overnight low of 1.2969 early in Asia and climbed steadily until early in the European session.  Since then it bounced within a 1.2994-1.3029 range

Canada housing starts data will be available this morning and they are expected to show a small decline.  US releases Unit Labour Costs.  Both data sets will be overshadowed by the US/NK war of words.  USDCAD could come under renewed selling pressure if the EIA crude data shows a large draw down.

FX Ranges for major currency pairs

close Open High Low
8-Aug-17 9-Aug-17 Range Mon.-Tues.
EURUSD 1.1749 1.1740 1.1763 1.1720
USDJPY 110.34 109.78 110.35 109.66
GBPUSD 1.2991 1.3007 1.3027 1.2969
USDCHF 0.9743 0.9646 0.9741 0.9613
AUDUSD 0.7912 0.7889 0.7914 0.7856
NZDUSD 0.7325 0.7323 0.7333 0.7310
USDCAD 1.2664 1.2675 1.2696 1.2665
GOLD 1260.11 1267.94 1269.00 1261.16
WTI 49.10 49.34 49.41 48.49

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