The Canadian dollar has risen 0.48% since Monday’s New York open and today. Prices climbed steadily in Asia and continued to do so during the European session and in early New York trading. Traders are in a positive risk mood, powered by relentless gains on Wall Street.
The S&P 500 has risen for seven consecutive days and even the jump in U.S. 10-year Treasury yields from 1.575% on Tuesday to 1.70% overnight failed to dampen enthusiasm. That enthusiasm has knocked the U.S. dollar for a loop this week, and it is poised to close with losses against the major G-10 currencies. The antipodean currencies are the biggest gainers with the New Zealand dollar rising 1.74% and the Australian dollar gaining 1.62%. The Canadian dollar managed to eke out a 0.48% gain.
The Canadian dollar is benefitting from West Texas Intermediate oil prices trading above $80.00/barrel. Those prices have additional upside due to post-pandemic demand, supply issues, and expectations for an early, cold start to winter.
Statistics Canada releases August Retail Sales data today. Retail Sales are expected to have risen 2.0% m/m and ex auto’s by 2.8%. The results are unlikely to have a lasting impact on the Canadian dollar as price action is being dictated by external forces.
EUR/USD spent the week in a $1.1620-$1.1670 range, and it is sitting around the middle of that band in early New York trading. Gains were capped by disappointing Purchasing Managers Index data. Composite and Services PMI were weaker than expected, while Manufacturing PMI was close to unchanged. Analysts continue to suggest the weakness is due to supply chain disruptions.
GBP/USD was unable to hang on to yesterday’s gains and prices dropped from $1.3814 to $1.3773. Weaker than expected Gfk consumer Confidence (actual -17, previous -13) and September Retail Sales (actual -0.2% m/m vs forecast 0.5%) reflect the impact of supply issues on the economy.
USD/JPY traded defensively despite the surge in U.S. 10-year Treasury yields. Japanese Consumer Price Index was as expected. The Bank of Japan monetary policy meeting is next week.
AUDUSD climbed steadily, rising from 0.7153 to 0.7187, benefitting from broad US dollar weakness, high commodity prices and speculation that the RBA will need to raise interest rates sooner than expected.
Federal Reserve Chair Jerome Powell speaks at 11:00 a.m. today.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
