Canadian Dollar Under Pressure

The Canadian dollar is under pressure, and the pressure is mostly from external forces.  The Canadian dollar peaked early in September and steadily retreated ever since.  The Bank of Canada surprised many economists when they raised interest rates on September 6, for the second time in 2017.  Since then a confluence of events have stymied additional Canadian dollar gains including a speech by Bank of Canada Deputy Governor Timothy Lane noting that the level of the Canadian dollar “was being watched carefully.”

Lately, the Canadian dollar has been a victim of broad US dollar strength arising from renewed expectations that the Federal Open Market Committee will raise interest rates in December. The Canadian dollar also suffered from broad US dollar demand when North Korea and President Trump began exchanging insults and threats.

The Canadian dollar traded in a narrow range overnight.  USDCAD traded with a bullish bias inside a 1.2364 1.2399 range but topside moves struggled against Canadian dollar support from firm oil prices.

WTI traded in a $51.87-$52.40 range, underpinned by expectations that rising global gro9wth and Opec production cuts were putting a serious dent into the previous supply/demand imbalance.

USDJPY chopped between 111.51-111.87, in Asia and Europe, trading with a negative bias on risk aversion.  Prices ticked higher in early New York trading.  The Bank of Japan minutes showed policymakers willing to stay with their current policy and optimistic because inflation measures have stopped falling.

NZDUSD suffered from a widening of the Trade Deficit and the uncertainty around the election outcome.  NZDUSD fell from 0.7276 to 0.7206 by the time New York opened.

Broad US dollar strength undermined AUDUSD which dropped from 0.7947 to 0.7897 in New York trading. Traders ignored firm commodity prices.

EURUSD broke key technical support in the 1.1820-30 area just before New York opened.  Prices dropped to 1.1786 due to concerns over the German

election results.  French President Macron is speaking about his Eurozone plans today, which contributed to the EURUSD retreat.

Sterling is under pressure. GBPUSD traded sideways until New York opened.  Broad US dollar strength, profit taking and bearish technicals drove GBPUSD from 1.3512 to 1.3419.

25-Sep-17 26-Sep-17
close open High Low
EURUSD 1.1847 1.1886 1.1935 1.1881
USDJPY 111.69 112.06 112.52 111.95
GBPUSD 1.3466 1.3524 1.3569 1.3477
USDCHF 0.9673 0.9734 0.9732 0.9696
AUDUSD 0.7935 0.7953 0.7972 0.7942
NZDUSD 0.7260 0.7271 0.7342 0.7254
USDCAD 1.2378 1.2329 1.2347 1.2325
GOLD 1310.00 1305.91 1313.52 1305.11
WTI 52.22 50.62 50.63 50.42

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