The Canadian dollar is poised to end a volatile trading week as the best performing G-10 currency.
The Australian dollar is the worst, having fallen 1.75% since Monday's open. USD/CAD bounced in a $1.2048-$1.2204 range, but the currency pair is not far from unchanged on the week despite the volatility.
Bank of Canada Governor Tiff Macklem is responsible for USD/CAD spiking to $1.2204 yesterday after he replied to a question about the currency’s value. He said that continued appreciation of the Canadian dollar could be a headwind to thebank's export projection and it could have a material impact on the economic outlook and monetary policy. Prices quickly retreated as Macklem was only stating the obvious.
The major Asia equity indexes closed with gains led by a 2.32% rise in Japan’s Nikkei 225. European stock markets are ticking higher into the U.S. Retail Sales data, and S&P 500 futures suggest a positive open for Wall Street. Crude oil and gold prices are firm, while 10-year Treasury yields are steady at 1.64%.
EURUSD traded in a $1.2072- $1.2128 range supported by softer 10-year U.S. Treasury yields and by the improved risk tone. EUR/USD has a positive bias above $1.20540.
GBP/USD bounced in $1.4038-$1.4075 range. Yesterday, Bank of England Governor Andrew Bailey said bank members are "already seeing a strong U.K. recovery" and that higher inflation will not persist. He added that interest rates would remain low.
USD/JPY continues to consolidate its post-U.S. Consumer Price Index gains, trading in a 109.26-109.65 range overnight as US inflation fears underpin prices.
AUD/USD consolidate earlier losses in a $0.7716-45 range and trades with a negative bias below 0.7760. AUD/USD is undermined by a drop in iron ore prices after reports China has told steel manufacturers to control price surges or face stiff penalties. NZD/USD outperformed its Australian cousin even though New Zealand Manufacturing Purchasing Managers Index dipped to 58.4.
Canada Manufacturing Sales are expected to rebound to 3.5% m/m in March after falling 1.6% in February.
Wholesale Sales will improve to 1.0% from a 0.7% drop. Neither report should have an impact on the Canadian dollar. The focus is on U.S. Retail sales, which analysts expect to rise 1.0% m/m in April. The result will be well below the 10% surge in March but strong enough to suggest the U.S. economy is recovering rapidly.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
