Canadian Dollar in Demand

The Canadian dollar soared after the Bank of Canada surprised markets and raised the overnight rate by 0.25 basis points, to 1.00 percent, on September 6.  The BoC statement was thought to be hawkish as well which led to predictions of a third rate hike in October 2017.

FX traders were caught off guard by the BoC’s announcement and hawkish statement.  USDCAD prices collapsed from 1.2412 to 1.2140.   Prices recovered somewhat, but the gains were short circuited on Friday when Canadian employment data was better than expected.  The headline number showed a gain of 22,000 jobs while the unemployment rate dropped to 6.2% from 6.3%.

Once again the Canadian dollar took flight but the move didn’t last due to a mix of pre-weekend profit taking ahead of uncertainty around Hurrican Irma.

The Canadian dollar started the new week with a subdued tone.  USDCAD drifted lower inside a narrow range.  There isn’t any domestic data to guide traders today leaving the currency to drift with broad US dollar movements.

North Korea partied rather than test H-Bombs and Asia markets breathed a sigh of relief.  USDJPY gapped higher at the open and never looked back.

China  August PPI (Actual 6.3% vs. forecast 5.6%, y/y) and CPI (Actual 1.8% vs. 1.6%, y/y) was betterf than expected but didn’t do much for AUDUSD or NZDUSD.  AUDUSD is currently trading in the middle of its 0.8030-70 range.

NZDUSD dropped in Asia and then rallied in Europe. It is trading in New York at 0.7285, near the top of its 0.7227-92 range.

EURUSD traded in a tight 1.1994-1.2029 range.  It touched the low after ECB member Benoit Coeure said that a rising euro could depress inflation if it isn’t accompanied by a strengthening economy. Prices are back at 1.2020 in early New York trading.

Sterling traded sideways in a 1.3170-98 band.  Traders were cautious ahead of upcoming UK data and the Bank of England meeting on Thursday.  The UK Parliament is voting on the Brexit “withdrawal bill.”

The no nukes from NK relief rally was evident in gold prices. Gold gapped lower at the open in Asia, falling from $1,346.93 at Friday’s close to a low of $1,334.63 in Europe.

Oil prices are off of Friday’s low of $47.30/barrel and are trading at $47.79/b.  Prices got a little support on news that Saudi Arabia is discussing production cut extensions with Venezuela and Kazakh.  However, traders are still concerned about how Hurricane’s Harvey and Irma will impact prices.

FX Ranges for major currency pairs


8-Sep-17 11-Sep-17
close open High Low
EURUSD 1.2018 1.2013 1.2029 1.1994
USDJPY 108.47 108.48 108.60 108.14
GBPUSD 1.3099 1.3195 1.3198 1.3170
USDCHF 0.9514 0.9493 0.9510 0.9466
AUDUSD 0.8047 0.8054 0.8070 0.8030
NZDUSD 0.7232 0.7285 0.7292 0.7227
USDCAD 1.2124 1.2116 1.2160 1.2118
GOLD 1346.93 1338.33 1339.95 1334.63
WTI 49.12 47.84 47.91 47.60

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