The Canadian dollar had a wild 24 hours, but when then the dust settled, USD/CAD opened today right where it opened yesterday. USD/CAD bounced erratically in a $1.3270-$1.3348 range since Tuesday’s New York open with prices tracking U.S. dollar moves against the major currencies. The domestic economic calendar is empty and will stay that way for the rest of the week.
Canadian dollar traders are ignoring oil prices. West Texas Intermediate, (WTI) the North American benchmark, is directionless in a $41.20-$43.50 range which has contained prices since August 4. Saudi Aramco’s forecast of rising demand for the rest of 2020 helped.
Gold trading was volatile overnight. XAU/USD dropped from its closing level of $1,911.62 to $1863.50 then soared to $1,949.31 during the Asia session. Profit-taking triggered stop losses and drove prices lower while opportunistic gold bulls took prices higher.
NZD/USD dropped from $0.6576 to $0.6526 following the Reserve Bank of New Zealand policy meeting. The central bank was expected to be dovish, and managed to surpass those expectations. It left the Overnight Cash Rate (OCR) unchanged at 0.25%, increased its quantitative easing purchases from NZD 60.0 million to NZD 100 million, and tweaked its growth forecast higher. The crushing blow came when Governor Adrian Orr said: "the MPC had expressed a preference for considering a package of a negative OCR and a ‘Funding for Lending Programme’ in addition to the current Large Scale Asset Purchase (LSAP) programme."
Despite the bearish sentiment, NZD/USD rallied in Europe, alongside widespread U.S. dollar selling pressures on the back of improved risk sentiment.
GBP/USD traders dismissed the day’s data dump and prices were directionless in a $1.3019-$1.3066 range.
The U.K. economy suffered its worst recession ever with Q2 GDP falling 20.4% q/q. Traders didn’t care. The result was expected due to all the measures taken to combat the coronavirus pandemic. June Industrial Production and Manufacturing data beat expectations.
EUR/USD remains rangebound.
The well-defined $1.1700-$1.1900 range contained prices since the beginning of August. Prices continue to consolidate earlier gains following last month's European Central Bank and European Union meetings. The actions taken by both groups sparked forecasts that Eurozone growth would outperform U.S. growth, especially since the Americans have bungled the coronavirus management.
U.S. inflation data is due today. It won’t be a factor for FX traders.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
