Canadian Dollar Wilting in Summer Heat
The Canadian dollar enjoyed another quiet overnight session. The Canadian dollar had been under pressure at the open in Asia due to broad US dollar strength after the better than expected Retail Sales report and a steep drop in oil prices.
At the end of Tuesday’s New York session, the American Petroleum Institute announced that US crude inventories declined by 9.2 million barrels in the reference week. That news allowed WTI oil to find a floor at $47.05/barrel. Prices ticked higher overnight. Topside gains were capped due to on-going concerns that over-supply issues are still a major concern, despite Opec’s best efforts.
USDCAD traded in a 1.2721-1.2768 range
The European session saw a flurry of activity when Eurozone GDP data was released. Seasonally-adjusted, Eurozone Q2 GDP gained 2.2%, beating the 2.1% that was expected. Various Eurozone nations also recorded forecast beating GDP data, suggesting that the Euro area recovery is improving and it is broad based.
The UK responded with solid data of its own. The UK unemployment rate set a new 44 year low when it dropped to 4.4%. Even better, Average earnings jumped 2.1% in the three months ending in June, beating the 1.8% that was predicted. GBPUSD rose to 1.2901 from 1.2843 but edged lower in New York trading.
In Asia, USDJPY traded in a narrow band, supported by Tuesday’s Retail Sales data and well above it’s recent low.
The Australian dollar was the best performing major currency overnight. AUDUSD rallied steadily from the opening low of 0.7817 to 0.7867 on profit taking and an upward revision to domestic wage data.
The New Zealand dollar was not as robust. NZDUSD inched higher in a narrow 0.7225-0.7251 range.
Today’s US Housing Starts, Building Permits, and EIA Crude stocks change reports will provide a little diversion ahead of the 2:00 pm (EDT) release of the FOMC minutes from the July 26 meeting. Those looking for any fresh insight about balance sheet reduction or rate increase plans will likely be disappointed.
FX Ranges for major currency pairs