Canadian Dollar Catches a Bid
The Canadian dollar has caught a bid. It is in demand, despite President Trump’s comment that he thinks the deal needs to be terminated. It is in demand despite broad (but limited) US dollar demand against the major currencies in overnight trading.
It is in demand because of the Bank of Canada’s hawkish monetary policy stance. The Bank of Canada looked past soft inflation data and hiked interest rates in July. They are widely expected to raise rates again, in October. That contrasts with the US outlook.
The Federal Reserve is cautious. We know that because every Fed speaker in the past few months has said that “they are cautious”. In January, traders were looking for at least three US rate increases. They have seen two and less than 50% of the market believe a third increase is on the agenda in 2017.
Nevertheless, USDCAD remains trapped inside the 1.2415-1.2780 range that has contained moves since July 12.
Overnight, the US dollar managed small gains against the majors except for the British pound and the Canadian dollar.
EURUSD fell from 1.1816 to 1.1785, where it opened this morning as positions were adjusted.
Sterling dropped when UK GDP data was as released. Q2 GDP was 0.3%, q/q, and 1.7%, y/y which was expected. Prices quickly rebounded, and GBPUSD bounced to 1.2829.
USDJPY rallied from a low of 108.85 to 109.40 due to profit taking ahead of the Jackson Hole meeting
The New Zealand Trade balance had a surplus of NZ85.0 million for July. NZDUSD rose to 0.7240 but the move didn’t last and prices declined.
AUDUSD traded lower on the back of lower commodity prices.
The Federal Reserve Board of Kansas City’s Jackson Hole Symposium begins today. ECB President Mario Draghi Fed Chair Janet Yellen and are the headliners
FX Ranges for major currency pairs