Canadian Dollar on Dark Side of the Moon

The Canadian dollar is on the dark side of the moon, meaning it was barely visible in overnight FX markets.  The total of the eclipse of the sun that will occur today did not have anything to do with FX markets except to provide reading material for bored traders.

The Canadian dollar managed to hang on to almost all of Friday’s gains which occurred after the Canadian inflation data was released.  CPI did not “shoot out the lights” Instead it was mostly as expected and that was enough to keep expectations for another Bank of Canada rate hike in October, alive.

USDCAD plunged from 1.2765, prior to the data, to a low of 1.2557 on Friday and closed at 1.2567.   In Asia, prices opened around 1.2567 and then ticked higher, peaking at 1.2705 in Europe.  USDCAD has since slipped back to 1.2582 in early New York trading.

It was a very quiet start to the FX week in Asia, in part due to a lack of top tier economic data.  USDJPY traded at 108.41 in Asia and edged down to 108.90 in Europe in a subdued session.

AUDUSD and NZDUSD traded quietly in narrow ranges.

Friday’s news that Stephen Bannon, another top White House official, got canned/resigned did not have any impact on Asia markets.  Neither did a report that a US Navy destroyer collided with an oil tanker in the Strait of Malacca.  Even news of the start of South Korea/US war games, a sore point with North Korea’s Kim Jung-Un, was ignored.

FX trading action didn’t improve in Europe, either.  EURUSD traded quietly in a 1.1732-64 range.  Traders are a little wary of ECB President Mario Draghi’s speech at the Jackson Hole symposium, which begins Thursday.  Some are concerned that he may reveal the ECB’s plans to taper quantitative easing.

Sterling bounced in a 1.2852-80 range.  News that the Rightmove UK house price index fell 0.9% in August wasn’t much of a factor.  Brexit uncertainties are capping GBPUSD topside move.

Oil prices rocketed higher on Friday, rising from $46.80 to $48.70 and nearly erased the entire week’s losses.  There wasn’t a specific reason for the move, but profit-taking and a decline in the Baker-Hughs rig count contributed to the rally.  Prices only inched down marginally overnight

Today’s FX market action won’t be a whole lot different from the overnight session.  There isn’t any data of note from US and Canada only releases June Wholesale Sales.  That leaves FX traders to look to Wall Street for direction.  They probably won’t find there either judging by the performance of global equity indices, which were mixed.  Today’s focus will be on the Total Solar Eclipse


FX Ranges for major currency pairs

close Open High Low
18-Aug-17 21-Aug-17 Range Mon.-Tues.
EURUSD 1.1763 1.1737 1.1773 1.1709
USDJPY 109.16 109.00 109.56 108.97
GBPUSD 1.2876 1.2875 1.2916 1.2864
USDCHF 0.9656 0.9680 0.9629 0.9602
AUDUSD 0.7934 0.7916 0.7929 0.7871
NZDUSD 0.7316 0.7310 0.7328 0.7278
USDCAD 1.2559 1.2601 1.2689 1.2635
GOLD 1286.35 1288.20 1289.01 1280.92
WTI 48.66 48.47 48.70 48.35

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