Canadian Dollar flirting with Disater

The Canadian dollar is flirting with disaster just like Molly Hatchet sang in 1979.  Speculative traders long CAD/Short US dollar positions, well not at record levels, are still stretched.  West Texas Intermediate oil prices have slid 3.7 percent since yesterday.  US and North Korea tensions have abated, helped by Kim Jong-un’s deferral of the missile strike on Guam plan.  New York Fed President William Dudley delivered somewhat hawkish remarks yesterday.  He said that he still expected US interest rates to increase again in 2017.

Last week’s bearish US dollar sentiment became this week’s bullish sentiment.  The US dollar posted additional gains against the G10 currencies overnight, which added to the Canadian dollar’s woes.

In Asia, AUDUSD climbed on a positive assessment of the minutes from the RBA meeting.  Those gains disappeared due to broad dollar strength and soft commodity prices.  AUDUSD dropped from 0.7875 to 0.7826.  NZDUSDD traded in a similar vein.

The easing of NK/US tensions led to a bigger unwind of safe-haven trades which gave USDJPY a bid.  The currency pair opened at 109.62 and climbed steadily to 110.46 in New York.

Europe trading was lighter than usual because of Assumption Day holidays throughout the Eurozone.  EURUSD was uneventful in Asia but picked up the pace in Europe, dropping from 1.1780 to 1.1721 then back to 1.1768 after a bump in Germany GDP (0.6%, q/q), although the result was expected.

GBPUSD was under pressure throughout the overnight session ahead of a series of data reports.  The UK released Retail Sales, PPI and CPI. Inflation was a tad worse than expected (July CPI 2.6%, y/y vs. forecast 2.7%, Core CPI 2.4%, y/y vs. forecast 2.5%) However, compared to June, the data was unchanged.  Still, GBPUSD sank to 1.2875 from an overnight top of 1.2968.

The greenback may extend gains this morning if the US data exceeds forecasts.  NAHB Housing Market Index, Export/Import Prices, Business Inventories, and Retail Sales are all on tap.

Overnight FX Ranges for Major Currency Pairs

close Open High Low
14-Aug-17 15-Aug-17 Range Mon.-Tues.
EURUSD 1.1786 1.1750 1.1791 1.1721
USDJPY 109.66 110.38 110.46 109.61
GBPUSD 1.2966 1.2901 1.2968 1.2900
USDCHF 0.9724 0.9716 0.9757 0.9703
AUDUSD 0.7855 0.7843 0.7875 0.7826
NZDUSD 0.7289 0.7281 0.7310 0.7280
USDCAD 1.2726 1.2736 1.2751 1.2720
GOLD 1282.28 1274.05 1281.82 1273.03
WTI 47.45 47.53 47.74 47.37

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