– Second tier US data on tap
– Traders biding their time until next week’s US employment data.
– US dollar trading defensively and with a negative bias.
USDCAD: open 1.3469, overnight range 1.3465-1.3489, close 1.3486, WTI $76.66, Gold, $2508.56
The Canadian dollar is trading with a bullish bias in the wake of Fed Chair Jerome Powell’s Jackson Hole speech. Mr. Powell said that it was time to ease monetary policy and traders and analysts are expecting about 100 bps of rate cuts before year end. That has fueled broad based US dollar selling which has exaggerated the moves due to thin summer markets.
The Canadian government has acted aggressively to prevent wide-spread economic damage by ordering binding arbitration on CN and CPKC unions who threatened a rail strike. In addition, the government also acted to protect is massive EV investments by slapping a 100% tariff on imports of Chinese made EV’s. Canada is following in the footsteps of the European Union and the US to counter-act what they claim are “unfair trade” practices by Beijing.
Oil prices have retreated from their overnight peak but are still elevated. WTI oil traded in a 76.50-77.47 range and is sitting at 77.02 in NY. Prices are underpinned by news that Libya is shutting down production of 1.12 million barrels/day due to an internal political dispute.
EURUSD flitted within a 1.1159-1.1178 range, as weak German Q2 GDP data dampened any potential gains. The GDP contracted by 0.1%, as anticipated, leading to a muted market response. Additionally, German Consumer Confidence worsened, dropping by 3.4 points to -22.0 from -18.6.
GBPUSD found some support and traded within a 1.3180-1.3247 range, bolstered by the broadly bearish sentiment towards the US dollar. Despite UK Retail Sales declining for the third consecutive month (-0.3% in August vs 0.2% in July), the news had little impact on the currency.
USDJPY edged higher, moving from 144.24 during early Asian trading to a peak of 145.18 before the NY session opened, before retreating to 144.80. There were no significant catalysts to influence direction, but ongoing expectations of lower US interest rates and rising Japanese rates continued to pressure the currency pair.
AUDUSD remained within a tight 0.6762-0.6792 range, with a lack of significant economic data from both Australia and the US keeping traders on the sidelines.
Today’s US data releases include Case-Shiller Home Prices and Consumer Confidence. The Canadian calendar is empty.