- The Knightsbridge FX daily will resume January 2.
- Canada October GDP expected to rise to 0.2% from 0.1%.
- US dollar mixed overnight, but lower compared to yesterday.
USDCAD: open 1.3273-77, overnight range 1.3269-1.3293, close 1.3282, WTI $74.56, Gold, $2055.74.
The Canadian dollar is riding a wave of bearish US dollar sentiment. Yesterday’s gains following the slightly better Canadian retail sales data were merely a coincidence. Canadian Retail Sales rose 0.7% in October, which was a tick below the 0.8% expected, boosted by lower gasoline prices. However, the Bank of Canada has already met, and the next meeting isn’t until January 24. By then, the November data will have been available.
The Canadian dollar rallied yesterday after US Q3 GDP and Philadelphia Fed manufacturing reports reinforced expectations for the FOMC to cut rates in March. A similar move could occur today if the November PCE Price Index data is lower than the 3.3% m/m that is expected.
The Canadian dollar may be getting a bit of support after WTI oil prices extended Thursday’s gains and climbed from $73.81/barrel to $74.89/b overnight. The gains are due to ongoing concerns that drone attacks by Yemeni Houthis on Red Sea shipping will disrupt oil supplies. However, sluggish Chinese economic growth suggests the gains are limited.
Trading is already in holiday mode, and liquidity will evaporate after this morning’s US data dump as market participants begin their seasonal exodus to enjoy the holidays with friends and family.
In Asia, the major equity indexes closed on a flat note, except for the Hong Kong Hang Seng index, which plunged 1.69% after Chinese regulators surprised gaming companies with a rash of new, all-encompassing, yet vague rules. European traders are not very motivated, and bourses there are close to unchanged. S&P 500 futures are also unchanged. Gold traders like the dovish outlook for US rates, and the shiny metal has risen over $30.00 to 2064.82 in NY.
EURUSD is supported by a dovish Fed outlook, trading at the top of its 1.0994-1.1024 range. Despite data showing a 10.2% year-over-year fall in German house prices, the focus remains on US data.
GBPUSD firmed in a 1.2672-1.2740 range, buoyed by broad US dollar weakness. UK Q3 GDP fell 0.1% quarter-over-quarter, with Retail Sales in November offsetting some recession fears.
USDJPY ranged between 141.87-142.55, reacting to Japanese inflation data.
AUDUSD performed strongly, driven by improved risk sentiment and the RBA's hawkish stance.
Season's Greetings, Merry Christmas, and Happy New Year from all of us at Knightsbridge Foreign Exchange
