Canadian Dollar Nipped by NAFTA
The Canadian dollar went for a wild ride following the Tuesday afternoon release of the Federal Open Market Committee (FOMC) minutes. It wasn’t alone. It was part of a broad US dollar sell-off that occurred in a thin “dog days of summer” trading environment.
It wasn’t pretty. USDCAD plummeted to 1.2590 from 1.2710, crushing support in the process. The bottom was found during the European session, and prices have recovered on news of a rather aggressive opening statement to the NAFTA renegotiation, by the US Trade Representative. Robert Lighthizer said “ We feel that NAFTA has fundamentally failed many, many Americans and needs major improvements” according to Reuters. USDCAD rallied from the low to 1.2640 in early New York trading.
Europe was busy. EURUSD’s post FOMC rally from 1.1692 peaked at 1.1789 in Europe and dropped to 1.1703 this morning. That was despite reasonably upbeat data Trade and inflation data. Headline CPI rose 1.2%, y/y in July (forecast 1.2%) while Core CPI was 1.3% (forecast 1.2%).
UK July Retail Sales beat expectations. (Actual 0.3% vs. forecast 0.2%) GBPUSD popped to 1.2977. However, downward revisions to the June data drove the currency down to 1.2861 in early New York trading.
The FOMC minutes and economic data reports made for an entertaining Asia session.
AUDUSD rallied to 0.7961 from 0.7924 after the Australia employment report was released. Australia added 27, 900 new jobs but 48,200 jobs were part-time. The AUDUSD gains were erased.
The New Zealand dollar didn’t fare any better with New Zealand economic data. Better than expected PPI data and broad US dollar weakness lifted NZDUSD from 0.7302 to 0.7334 but the move was revered in Europe.
Oil traders were sidelined. WTI drifted inside a narrow $46.70-$46.92 band overnight. Prices dropped through the bottom to $46.55 in early New York trading due to ongoing supply concerns.
There aren’t any Canadian data releases to influence USDCAD trading and this morning’s US data is of the third-tier variety.
FX Ranges for major currency pairs