Canadian Dollar Bias is Negative

The Canadian dollar bias is negative.  The Canadian dollar is being undermined by a variety of influences including:

1)    Positioning:  The speculator community is still substantially long CAD/short US dollars

2)    Oil Prices:   WTI oil cannot sustain gains above $50.00/barrels.  Traders believe that prices within a $47.00-$50.00/barrel range are reflected in the current price.

3)    Bank of Canada: Some traders are concerned that the Bank of Canada may not be too quick to make a second interest rate hike due to the strength of the currency.

4)    US Dollar:  Broad US dollar strength has provided addition support to USDCAD.

On the other hand, Canadian dollar losses will be mitigated by the prospect of stronger than expected domestic data and renewed US dollar selling if American inflation data continues to disappoint.

Oil prices slipped in Europe.  Reuters reported that China oil demand slipped by 500,000 barrels per day in July, reviving rising supply/decreased demand concerns.

In Europe, June Industrial Production data declined 0.6%.   The forecast was for a drop of 0.5% which led to EURUSD selling from a peak of 1.1837 mid-morning to 1.1793 by the New York open.

GBPUSD stayed inside a narrow 1.2973-1.3020 range.  Sterling traders remain concerned about Brexit, Bank of England rate hike plans and concern that United Kingdom growth may lag that of the Eurozone.

Asia opened with news that Japan Q2 GDP data surpassed expectations, rising 1.0%, q/q vs. forecast for a 0.6% gain.  Donald Trump took a time out from chirping at North Korea.   That led to an unwind of risk aversion trades, and USDJPY rallied from 108.95 to 109.79 by the New York open.  The rising USDJPY and soft economic data led to a lower Nikkei

Disappointing China data put downward pressure on the antipodean currencies.  China Urban Investment, Industrial Production, and Retail Sales reports were below forecasts.  AUDUSD dropped from 0.7917 to 0.7870 which is where New York found it.  NZDUSD fell to 0.7292 from 0.7329 in the same period

Overnight FX ranges for major currencies.

close Open High Low
11-Aug-17 14-Aug-17 Range Mon.-Tues.
EURUSD 1.1823 1.1798 1.1837 1.1793
USDJPY 109.08 109.70 109.79 108.95
GBPUSD 1.3009 1.2976 1.3020 1.2973
USDCHF 0.9610 0.9679 0.9678 0.9613
AUDUSD 0.7890 0.7872 0.7917 0.7870
NZDUSD 0.7320 0.7293 0.7329 0.7292
USDCAD 1.2681 1.2707 1.2707 1.2672
GOLD 1285.30 1281.20 1289.73 180.47
WTI 48.73 48.61 48.90 48.52

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