Canadian Dollar Grinding Higher
The Canadian dollar broke above the 85 cent level against the US dollar on Friday, and hasn’t looked back. The Canadian dollar strength is because of broad US dollar weakness which was exacerbated on Friday. FX markets had hoped that Fed Chair Janet Yellen would use her speech at the Jackson Hole Symposium, to provide some clarity on the outlook for US monetary policy. She didn’t.
Then traders shifted their focus to European Central Bank President Mario Draghi’s speech. Many expected that he would announce the end to the Eurozone quantitative easing program. He didn’t.
EURUSD exploded higher, the US dollar index collapsed and the major G10 currencies rallied.
The weekend was filled with news of geopolitical issues, Washington political drama, a major hurricane in Texas and Trump threatening NAFTA again.
Asia took note of all the drama and decided to sit on their hands. FX trading action was subdued. USDJPY traded in a 109.03-109.39 range and opened in New York at 109.20.
AUDUSD consolidated Friday’s gains and traded in a 0.7917-0.7952 range. NZDUSD traded sideways.
The European session was even quieter. That’s because the UK was closed for a bank holiday. With more than one-third of the daily FX volume occurring in London, the loss of that liquidity left markets on the sidelines
Oil prices were choppy. WTI rallied at the Asia open and reached $48.08/barrel. That move quickly reversed and WTI dropped to $47.28. Traders aren’t sure if the loss of refining capacity which raises the price of gasoline is enough to offset the decline in oil demand from the refineries that are close.
USDCAD is trading with a negative bias and testing major support in the 1.2415-60 area. A decisive move below the bottom of the range suggests additional gains toward the 1.2000 area.
The new York trading session may be quieter than usual due to the UK holiday. Traders will be focused on the Washington debt ceiling talks and the Texas floods. There isn’t any US economic data of note, being released today.
FX Ranges for major currency pairs