– Trading subdued ahead of US CPI Wednesday
– Commodities, including oil prices, climb
– US dollar opens modestly lower
USDCAD Snapshot open 1.2843-47, overnight range 1.2846-1.2872 close 1.2856, WTI oil $90.26, Gold $1791.05
The Canadian dollar beat back selling pressures yesterday morning, rallied throughout the day, and consolidated gains in a tranquil overnight session.
USDCAD is trading choppily in a 1.2740-1.2980 range, which has contained price action for nearly three weeks. Some analysts warn that Friday’s weaker than expected Canadian Labour Force survey reduces the need for the Bank of Canada to raise rates aggressively on September 7. The soft employment picture suggests the Canadian economy may be slowing.
The Canadian employment data contrasted sharply with the employment results south of the border. The surprisingly strong nonfarm payrolls data points to a still robust economy that can easily withstand higher US interest rates. That divergence will limit near-term Canadian dollar gains.
We are nearing the end of the dog days of summer (July 3 to August 11), but trading won’t return to normal volumes until after Labour Day.
There were no top tier economic reports from Europe, Canada, or the US yesterday, and it will be the same today.
Fortunately, former President Donald Trump provided a distraction. The FBI raided his Mar-a-Lago estate last night to search for classified documents illegally removed from the White House.
Wall Street finished close to unchanged yesterday, which didn’t give Asian equity traders an incentive to trade. The Nikkei 225 lost 0.88%, while Australia’s ASX 200 index gained 0.13%. European bourses are trading in negative territory except for the UK FTSE 100, which is flat. Wall Street equity futures are flat to lower, while oil and gold prices are higher.
EURUSD traded in a 1.0190-1.0247 range, with most of the gains coming during the European session.
There wasn’t a specific catalyst for the rally except for position adjusting in anticipation of a weak US inflation number. The EURUSD technicals are bearish below 1.0290.
GBPUSD led the EURUSD move, rising from 1.2068 to 1.2129 after Bank of England Deputy Governor Dave Ramsden mentioned cutting rates in the event of an economic slowdown. However, markets completely ignored his comment that a rate cut scenario was not his forecast. GBPUSD technicals are bearish below 1.2210.
USDJPY was choppy in a 134.68-135.15 band ahead of Wednesday’s US inflation data, with activity curtailed by steady US 10-year Treasury yields at 2.792%.
AUDUSD traded in a 0.6966-0.6993 range with prices underpinned by an improvement in the Nation Australia Bank’s Business Conditions survey (actual 20 vs previous 14).