The US dollar is off balance. FX traders who were expecting that the Jackson Hole Symposium would provide some clarity to the US and Eurozone monetary policy outlook were disappointed. Neither Fed Chair Janet Yellen or ECB President Mario Draghi discussed monetary policy during their speeches.
Traders expressed their disappointment by selling US dollars. The dollar ended Friday with losses all around.
Asia kicked off the new week with lots to worry about. North Korea launched three missiles in defiance of President Trumps “fire and fury” threat. Hurricane Harvey’s devastation of the Texas Gulf Coast led to choppy oil markets. President Trump’s threat to shut down the government over debt ceiling negotiations also weighed on the green back. USDCAD traders ignored Trumps repeated threat to terminate NAFTA.
USDJPY, dipped, rallied, and repeated the process, trading in a 109.03-109.39 range. It is sitting near the top of the range in New York trading.
AUDUSD traders were content to consolidate Friday’s gains, and the currency pair stayed inside a 0.7917-0.7952 band. Kiwi traded similarly but in a 0.0020 point range.
The European session was a write-off because the UK was closed for a Bank Holiday. That was all the excuse needed by traders in other centres to do nothing. A lack of top tier, actionable economic data didn’t hurt their cause.
Oil prices rallied in Asia but peaked quickly. WTI dropped from $48.08 to $47.26 with traders trying to understand how the Texas hurricane will impact prices. Will a sharp rise in gasoline prices be enough to offset the decline in crude demand because of shutter refineries?
USDCAD was largely ignored overnight and Trump’s threat to “terminate “NAFTA did not resonate with traders. Broad US dollar weakness has USDCAD probing support at 1.2460, which if broken will lead to 1.2415. Traders are looking ahead to Thursday when Canada July GDP data will be released. The forecast is for a gain of 0.1%, well down from June’s 0.6% rise.
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish while prices are trading below 1.2520 A decisive break below support at 1.2460 will extend losses to 1.2415. A move above 1.2520 will lead to 1.2460-1.2560 consolidation. Longer term, a break below the 2017 low of 1.2415 opens the door to further losses to 1.2285.
Today’s Range 1.2415-1.2490
Chart: USDCAD daily