USD/CAD - Markets in Risk-Off Mode

Global markets moved to risk off with gold, bonds, the yen all rising and with equities taking the froth off a hot market. U.S. President Donald Trump, in a warning to North Korea's nuclear ambitions, said the threat would be met with "fire and fury." North Korea made threats in retaliation, saying its military is examining a possible strike on Guam. Guam is a small South Pacific island that is a strategic U.S. military outpost with 6,000 personnel and host to nuclear bombers.

As tensions in the Korean Peninsula rise, here in North America there is limited economic data starting at 8:30 am Q/Q U.S. Non-farm Productivity, then at 10 a.m. Wholesale Inventories, followed by Crude Oil Inventories at 10:30 a.m. ET. Not only is the geopolitical risk putting pressure on the Canadian dollar this morning but June Building Permits for June decreased to 2.5% vs. previous of revised 8.9%. The Canadian dollar is testing the first resistance of $1.2714 ($0.7865) after the data. Today's expected trading range is $1.2658
($0.7900) to $1.2738 ($0.7850).

The euro is stabilizing today after the release of some positive data from the euro-zone. Italian industrial production increased 1.1%, beating the market forecast of 0.2%. The Banque de France’s industrial sentiment index also unexpectedly rose to 105 which is the highest in six years. Euro technicals are neutral to bearish today.

Investors are being treated to another slow day from the U.K. with no releases scheduled. With little in the cards yesterday to discuss, investors have been left at the mercy of wider economic events. With the currency in such a fragile position, investors have seen sterling fall across the board and with nothing to digest today, they could see this trend continue. Markets will await tomorrow's release of Manufacturing Production m/m which is scheduled to increase slightly from -0.2% to 0.0%. If this figure comes in positively, traders may see a slight reversal of recent losses however if this falls under forecast we could see the pound fall to new lows.

The Australian dollar weakened further after the release of soft domestic and Chinese data overnight. Australian home loans growth slowed to 0.5% m/m, missing the expectation of 1.5%. A miss does point to a possible slowdown in the Australian housing market. Chinese Consumer Price Index also slightly missed the target, further putting downward pressure on the Aussie. Investors will also get the Reserve Bank of New Zealand rate announcement this afternoon at 5:00 pm EDT. Expectations are for the central bank to hold interest rate unchanged at 1.75%.

Oil (WTI): $49.57 U.S. per barrel

Gold: $1,274.78 U.S. per ounce

Silver: $16.80 U.S. per ounce

Copper: $294.20 U.S. per tonne

Dollar Index: 93.565

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