September is ending, as is the third quarter of 2019. Wall Street appears to be closing with gains of over 1.0% for the month, which suggests there may be some Canadian dollar demand for portfolio re-balancing requirements late this morning.
The British pound was the biggest-gaining major G-10 currency against the U.S. dollar in September, rising 2.7%. The Canadian dollar put in the second-best performance, rising 0.88%. The entire September range occurred in the first 10 days when USD/CAD dropped from $1.3376 to $1.3135. The rest of the month’s price action was confined to a narrow $1.3204-1.3304 band.
This week started with traders fretting over sketchy threats by the U.S. administration to end Chinese companies’ listings on American stock exchanges and by oil market concerns. Saudi Crown Prince Mohammed bin Salam, interviewed on CBS "60 Minutes", warned of a serious global economic slowdown if Iran disruption oil shipments. President Trump’s threatened impeachment by Democrats is merely a noisy distraction at this point.
China Caixin August Manufacturing Purchasing Managers Index was 51.4, beating forecasts for a 50.2 increase. Usually, when this report is better than expected, it underpins AUD/USD. Not this time. AUD/USD traders are more concerned about the direction of domestic interest rates. The Reserve Bank of Australia is widely expected to trim the Overnight Cash Rate (OCR) to 0.75% from 1.00%. If so, it would be the third rate cut since May. AUD/USD traded with a negative bias inside a narrow $0.6747-$0.6769 range.
The China data didn’t help NZD/USD either. Bearish technicals and a dovish outlook from the Reserve Bank of New Zealand weighed on prices, driving NZD/USD from $0.6292 to $0.6252.
USD/JPY dipsy-doodle in a $107.76-$108.01 range. The Summary of Opinions report released by the Bank of Japan after monetary policy meetings triggered selling pressure when it said policymakers discussed additional easing. The move was quickly reversed as the news was stale. BoJ Governor Karuhiko Kuroda made similar statements last week. Prices bounced from their low and opened in Toronto at the top of the range.
EUR/USD continues to suffer from weak euro-zone data. German August Retail were weaker than expected at 0.4% m/m, which offset any positive sentiment from the improvement in the euro-zone unemployment rate to 7.4% from 7.5%.
GBP/USD rallied in Asia and retreated during the European session. U.K. Q2 Gross Domestic Product rose 1.3%, beating the forecast for a gain of 1.2%. However, ongoing Brexit concerns capped gains and prices retreated to $1.2298 in early Toronto trading.
This morning, Statistics Canada releases August Raw Materials Price Index and Industrial Products Price data. U.S. economic reports include the Chicago Purchasing Managers Index for September.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
