The Canadian dollar traded in a narrow range overnight as did the rest of the G-10 major currencies. Currency traders continued to drift toward positive risk sentiment trades with the cancellation of U.S. tariffs against Mexico.
Traders ignored fresh inflammatory comments from President Trump. He made new threats against China and took shots at the Federal Reserve and Chairman Jerome Powell.
Trump was interviewed on CNBC and said “The China deal is going to work out. You know why? Because of tariffs. Right now, China is getting absolutely decimated by companies that are leaving China, going to other countries, including our own, because they don’t want to pay the tariffs."
He was just getting started and also said "They devalue their currency, they have for years: It’s put them at a tremendous competitive advantage. And we don’t have that advantage because we have a Fed that doesn’t lower interest rates. We should be entitled to have a fair playing field, but even without a fair playing field — because our Fed is very, very disruptive to us — even without a fair playing field we are winning. Don’t forget: the head of the Fed in China is President Xi ... he can do whatever he wants,”
Traders ignored Trump’s complaint about the Fed because he didn’t saying anything he hasn’t already said.
Asia equity markets did not react to the President’s remarks about China. They were still relieved that the Mexico tariffs were cancelled.
China’s Shanghai Shenzhen CSI 300 index led the major Asia indices higher, rising 3.06%.
The U.S. dollar opened in Toronto on a mixed note. The improved risk sentiment undermined the Japanese yen and, Swiss franc and the antipodean currencies while the Canadian dollar, euro and British pound squeaked out minor gains.
EUR/USD traded in a narrow band as relief from news that the Mexico tariffs were cancelled, faded. Prices were under pressure after weaker than expected Sentix June investor confidence data, which was -3.3 compared to the forecast of 2.9.
GBP/USD traded choppily in a $1.2672-$1.2726 range. Prices rallied when the wage component of the employment report was a tick higher than expected. Comments from a Bank of England official Michael Saunders, suggesting that U.K. rates could rise on a smooth Brexit also underpinned the currency.
The Canadian dollar continued to trade with a bullish bias after breaking some key resistance areas on Friday. Prices are also supported by WTI oil price stability above $50.00/barrel. However, further gains may be a struggle as concerns that the Bank of Canada could cut interest rates as soon October are evaluated.
The only U.S. economic reports available today are Producer Price Index and the Redbook Index.-
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
