In the mid-70’s, TV viewers were told that “r-o-l-a-i-d-s, spells relief. Today, FX markets spell relief “no nukes form NK”.
Kim Jong-un chose to party rather than explode H-bombs. That reprieve from annihilation led to a global stock market rally and the trimming of risk aversion trades.
Traders were also encouraged because Hurricane Irma didn’t live up to the hype in Florida. It was still nasty.
The US dollar traded in narrow bands in a fairly subdued overnight session.
EURUSD traded in a tight 1.1994-1.2029 range. It touched the low after ECB member Benoit Coeure said that a rising euro could depress inflation if it isn’t accompanied by a strengthening economy. Prices are back at 1.2020 in early New York trading.
Sterling traded sideways in a 1.3170-98 band. Traders were cautious ahead of upcoming UK data and the Bank of England meeting on Thursday. The UK Parliament is voting on the Brexit “withdrawal bill.”
China August PPI (Actual 6.3% vs. forecast 5.6%, y/y) and CPI (Actual 1.8% vs. 1.6%, y/y) was betterf than expected but didn’t do much for AUDUSD or NZDUSD. AUDUSD is currently trading in the middle of its 0.8030-70 range.
NZDUSD dropped in Asia and then rallied in Europe. It is trading in New York at 0.7285, near the top of its 0.7227-92 range.
The no nukes from NK relief rally was evident in gold prices. Gold gapped lower at the open in Asia, falling from $1,346.93 at Friday’s close to a low of $1,334.63 in Europe.
Oil prices are off of Friday’s low of $47.30/barrel and are trading at $47.79/b. Prices got a little support on news that Saudi Arabia is discussing production cut extensions with Venezuela and Kazakh. However, traders are still concerned about how Hurricane’s Harvey and Irma will impact prices.
USDCAD is consolidating last week’s gains following the Bank of Canada rate hike and the upbeat employment data.
The day ahead is likely to be subdued. There isn’t any data of note. US traders will be assessing the impact of Hurricane Irma on the US economy. It is also the 16th anniversary of the terrorist attacks in New York, which will put a damper on trading.
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish. The downtrend channel from the July 31 peak is intact while prices are inside a 1.1980-1.2220 band. The current price is in the middle of that range. For today, USDCAD support is at 1.2060 and 1.2010. Resistance is at 1.2140 and 1.2170.
Today’s Range 1.2060-1.2130
Chart: USDCAD 1 hour