- Loonie struggling to find a direction
- Risk sentiment improves following US retail sales data.
- US dollar drifts lower in uneven manner.
USDCAD: open 1.3720, overnight range 1.3715-1.3736, close 1.3734, WTI $76.88, Gold, $2463.44
The Canadian dollar has a lot in common with a car with bald tires stuck on a patch of ice. Both are spinning their wheels rapidly and going nowhere. And even next week’s domestic inflation report due Tuesday or Retail Sales on Friday will have much impact. That’s because the Loonie is dancing to the US dollar’s tune and that music is being conducted by Fed Chair Jerome Powell.
The American consumer is still spending money. Retail sales rose 1.0% in July (forecast 0.3% and 0.4%, excluding autos. Weekly jobless claims declined and taken together, the data suggested that the US economy is far stronger than thought just a few weeks ago and the risk of a recession was put back on the shelf.
West Texas Intermediate oil traded lower in a 75.54-78.07 range thanks to improved risk sentiment. However that can change quickly if Iran launches another attack on the weekend, which many believe is likely.
EURUSD is moving within a narrow 1.0971-1.0991 range, as there’s a lack of significant Eurozone economic data to drive movement. Prices are expected to remain between 1.0950 and 1.1000 until the 10 a.m. EDT option expiry window, which will see $2.25 billion of 1.0950-60 strikes and $2.7 billion of 1.1000 strikes expiring.
GBPUSD is trading with an upward trend in a range of 1.2852-1.2909, supported by a 0.5% increase in UK retail sales for July, compared to June's 0.8% decline, and a slightly weaker U.S. dollar overnight.
USDJPY has consolidated the gains made yesterday, trading in a range of 148.45-149.35 overnight. The selling pressure likely stemmed from the rally in Japanese stocks and discussions suggesting a resurgence in the yen carry trade.
AUDUSD rose from 0.6607 to 0.6642 following somewhat hawkish remarks from RBA Governor Michele Bullock about Australia’s interest rate outlook. She dismissed the possibility of near-term rate cuts, indicating that while the market is anticipating a rate reduction by year-end, the likelihood is low. Prices slightly dipped as New York markets opened, aligning with softer U.S. equity futures.
NZDUSD traded within a 0.5978-0.6028 range, benefiting from a more favorable global risk sentiment. RBNZ Governor Adrian Orr suggested that the recent 0.25% rate cut might be followed by additional reductions, albeit at a "cautious and measured pace."
Michigan Consumer Sentiment and Consumer Expectations are due.
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