Canadian Dollar Hoping for Shoppers

The Canadian dollar not only failed to extend gains overnight, but it also reversed direction and gave up ground as positions were adjusted ahead of this morning’s release of Retail Sales by Statistics Canada.  The forecast is for June Retail Sales to rise 0.3%, down from the 0.6% recorded in May.  Retails Sales, excluding autos, is expected to be flat.

A weaker than expected report would lead to additional USDCAD gains toward 1.2680, especially if the bias to buy US dollars seen overnight, continues.

The Canadian dollar isn’t getting any joy from oil price moves.  West Texas Intermediate (WTI) has been bouncing inside a $46.50-$49.50/barrel range for the past two weeks, and those price swings have been largely ignored by traders.

Overnight, the US dollar saw some modest demand despite a lack of major economic data releases.  Traders have shifted their focus to the end of the week Kansas City Federal Reserves’ Jackson Hole symposium.  There is a lot of speculation that the keynote speakers, Federal Reserve Cahir Janet Yellen and European Central Bank President Mario Draghi will shed some light on the outlook for monetary policy in their respective regions.  That has led to US dollar demand as short dollar positions get trimmed.

In Europe,  weaker than expected Eurozone August ZEW Economic Survey (Actual 29.3 vs. forecast 34.2 and July 35.6) led to EURUSD selling.  It fell from 1.1823 to 1.1753, erasing yesterday’s move.

Sterling was under pressure as well.   GBPUSD traders dropped from 1.2907 to 1.2824 due to the broad dollar weakness ahead of Jackson hole.

In Asia, AUDUSD and NZDUSD were rangebound. That changed when European data led to broad US dollar selling.  AUDUSD peaked at 0.7949 and dropped to 0.7901 by the New York open.  NZDUSD topped out at 0.7333 and is trading in New York at 0.7280.

USDJPY was bid from the open,  rising from 108.90 to 109.40 in Europe, as short dollar positions got pared back.

FX Ranges for major currency pairs

close Open High Low
21-Aug-17 22-Aug-17 Range Mon.-Tues.
EURUSD 1.1809 1.1756 1.1823 1.1756
USDJPY 108.90 109.29 109.45 108.90
GBPUSD 1.2896 1.2836 1.2907 1.2827
USDCHF 0.9621 0.9661 0.9661 0.9619
AUDUSD 0.7937 0.7905 0.7949 0.7901
NZDUSD 0.7323 0.7284 0.7333 0.7280
USDCAD 1.2567 1.2588 1.2593 1.2549
GOLD 1291.72 1285.34 1292.42 1283.31
WTI 47.45 47.55 47.84 47.43

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