The Canadian dollar is trading sideways in Toronto. The overnight session was mostly uneventful as Summer Market Syndrome, and a lack of economic data left the major G-10 currencies trapped in well-defined trading bands.
The U.S. and China meeting planned for Saturday August 15 was cancelled. There wasn’t an official reason given for the move. One report said the delay was so China had more time to buy American goods to fulfill its trade commitments. Other officials suggested it because of a "scheduling conflict". FX traders ignored the news.
The U.S. dollar traded choppily and was on the defensive overnight. Traders were cautious because of rising COVID-19 cases in the U.S., South Korea, and news that New Zealand extended its lockdown in Auckland, the country’s largest city, until August 26.
Canada continues to take measures to prevent the spread of the coronavirus. The closure of the Canada/U.S. border to non-essential travel extends to at least September 21. If the U.S. cannot get their COVID-19 outbreak under control, the border closure may last until the New Year.
Friday’s U.S. Retail Sales report was a disappointment, but the details were far more uplifting. The prior two releases were revised higher.
The headline number was depressed by weak auto sales which is normal at this time of year as buyers await the new models.
In Asia, AUD/USD rallied, supported by news that the People’s Bank of China (PBoC) injected liquidity into the system. Chinese stocks roared higher with the Shanghai Shenzhen CSI 300 index gaining 2.4%. Firmer commodity prices also supported AUD/USD. NZD/USD lagged AUD/USD gains due to the Reserve Bank of New Zealand’s dovish monetary policy stance, the elevated risk of negative rates, and coronavirus concerns.
USD/JPY squeezed lower despite poor Japanese Q2 Gross Domestic Product data which fell 27.8% year over year, as predicted. Prices were weighed down by softer U.S. Treasury yields.
The Canadian dollar tracked the antipodean currency moves but lacked the upside momentum to break through major USD/CAD support in the $1.3190-$1.3220 area. However, USD/CAD struggles to rally as speculative short CAD positioning is approaching a 12-month peak. Traders are also keeping an eye on Ottawa, where there are rumours that Finance Minister Bill Morneau may be ousted as Prime Minister Trudeau attempts to lay blame and deflect attention from his shortcomings.
There are not any tier one economic reports available today.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
