Canadian Dollar Sideswiped

A Bank of Canada official sideswiped the Canadian dollar.   Yesterday BoC Deputy Governor Timothy Lane said they were closely watching the strength of the Canadian dollar.  He added that the Nafta negotiations are a risk.

The Canadian dollar was overbought prior to the speech which may have exacerbated the USDCAD rally.  Prices accelerated higher, blowing through resistance at 1.2240, finally running out of steam at 1.2333  The move occurred at the same time as the US dollar was climbing against the rest of the major currencies.

The Canadian dollar consolidated the September 18 losses, overnight, trading in a 1.2264-1.2307 range

Asia markets saw broad US dollar weakness albeit in shallow trading bands with markets adjusting positions ahead of President Trump’s speech to the UN on September 19 and ahead of the Federal Open Market Committee meeting on September 20.

USDJPY bounced in a 111.38-111.87 range with gains capped by softer Treasury yields.  There are rumours that Japanese Prime Minister Shinto Abe will call a snap election. The Nikkei had a rose 1.96% to close at 20,299.38

AUDUSD climbed from 0.7960 to 0.7999 following the release of the RBA minutes. The minutes were “upbeat,” supporting the currency.

NZDUSD followed AUDUSD higher with broad US dollar selling pressure contributing to the move.  Traders are looking ahead to the GlobalDairyTrade auction results, later today.

EURUSD drifted higher rising to 1.2005 from 1.1951 in pre-FOMC positioning. German Zew data was better than expected which provided some support to the single currency.

Sterling tried to recoup some of the losses which occurred after Bank of England Governor Mark Carney tried to downplay UK rate hike risks. The rally met resistance at  1.3550 and prices dropped to 1.3470 before recovering to 1.3508

Oil prices rallied throughout the session due to on-going support from last week’s forecasts of rising demand and the impact of production cuts.  WTI rose from $49.81.$50.35

US data releases and President Trump’s UN speech should make for an interesting morning.   The US data is all second tier and include Housing Starts, Building permits, and Import/Export Index.  President Trump addresses the UN today at 1030 am EDT which has added another layer of uncertainty to FX markets.

 

FX Ranges for major currency pairs

18-Sep-17 19-Sep-17
close open High Low
EURUSD 1.1952 1.1989 1.2005 1.1951
USDJPY 111.45 111.66 111.87 111.38
GBPUSD 1.3492 1.3502 1.3550 1.3470
USDCHF 0.9619 0.9635 0.9644 0.9596
AUDUSD 0.7959 0.7997 0.7999 0.7960
NZDUSD 0.7257 0.7294 0.7297 0.7258
USDCAD 1.2294 1.2269 1.2307 1.2264
GOLD 1308.26 1308.26 1309.66 1306.51
WTI 49.91 50.35 50.35 49.81

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