Canadian Dollar Rises as US dollar Sinks

The Canadian Dollar is rising, supported by broad US dollar weakness,  USDCAD rallied yesterday afternoon and finished the day looking like it would extend the gains in overseas markets.

That view was blown out of the sky, literally, when North Korea launched another missile.  This missile passed over Northern Japan and splashed into the Pacific Ocean.  It spooked traders and sparked a stampede into risk aversion trades.  The broad US dollar weakness lifted the Canadian dollar.  USDCAD dropped from 1.2532 to 1.2442.

It wasn’t alone.  USDJPY  plummeted, falling from 109.22 to 108.27.  Japan’s Prime  Minister  Shinzo Abe called it a “most serious and grave”  threat.  President Trump said that the US was 100% with Japan.

AUDUSD plunged from 0.7968 to 0.7907 following the missile launch and then rallied to 0.7953 into the New York open, recouping almost all its earlier losses.  NZDUSD traded similarly, in a 0.7220-0.7279 band.

EURUSD rallied toward 1.2000, yesterday but the move stalled at 1.1982.  That wasn’t the case overnight.  EURUSD plowed through  1.2000 when Europe open and that level hasn’t been seen since. Better than expected German Consumer Confidence data, supported the rally.

Sterling traded in its own world although it did garner support from the broad US dollar weakness.  GBPUSD climbed steadily, rising from 1.2922 to 1.2977. Weaker Nationwide Housing Prices for August did not have much impact.

Oil prices were steady in a $46.56-$46.94 range.  The prospect of weaker US crude demand resulting from the closure of numerous refineries in Texas because of flooding has put pressure on the downside.

The North Korea may have passed over Japan and fell into the Pacific Ocean, but it managed to damage Global equity markets.  The major Asia and European indices are in the red and US equity futures are showing a lower opening on Wall Street.

President Trump’s reaction to North Korea, ongoing concerns about the disaster in Houston, and US economic data will provide trading fodder today. The June Case-Shiller Home Price index is forecast to rise 5.7%, unchanged from May.

USDCAD traders will keep their eye on Canadian Industrial Production (forecast -0.2%) and Raw Materials Price Index (forecast -2.5%)



FX Ranges for major currency pairs

close Open High Low
28-Aug-17 29-Aug-17
EURUSD 1.1974 1.2039 1.2069 1.1956
USDJPY 109.26 108.59 109.22 108.27
GBPUSD 1.2931 1.2970 1.2977 1.2922
USDCHF 0.9553 0.9459 0.9551 0.9429
AUDUSD 0.7964 0.7953 0.7969 0.7907
NZDUSD 0.7256 0.7274 0.7279 0.7220
USDCAD 1.2500 1.2456 1.2532 1.2442
GOLD 1311.59 1320.10 1325.85 1313.64
WTI 46.71 46.56 46.94 46.56

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