The Canadian dollar dropped in Asia due to a bout of risk-aversion selling. The rise in the number of coronavirus delta-variant cases in many regions, the ongoing Chinese regulatory crackdown, and geopolitical tensions, drove equity markets lower, and fueled safe-haven demand for U.S. dollars.
NZD/USD got the ball rolling. The New Zealand government’s ham-fisted reaction to a single-case of the coronavirus delta-variant led to the currency free-falling to $0.6909 from $0.7028. One person in Auckland had the COVID-19 Delta variant and the government locked down the entire country of 4.9 million people.
The move led economists to amend their predictions for tomorrows Reserve Bank of New Zeland monetary policy meeting. Westpac Bank and ASB Bank no longer expect a 0.25% rate hike, believing the COVID outbreak will force the central bank to leave rates unchanged.
The Reserve Bank of Australia minutes from August 3 were released and a comment that the central bank will react to a new COVID-19 outbreak, suggested it would upset the tapering agenda, sending AUD/USD lower.
The Canadian dollar was collateral damage when the antipodean currencies plunged, and the U.S. dollar rallied on safe-haven demand. The Canadian dollar saw added pressure from relatively soft oil prices (compared to two-week ago levels). U.S. Retail Sales and Federal Reserve Chair Jerome Powell’s speech will provide direction today. There are not any actionable Canadian economic reports available until July Consumer Price Index data (forecast 3.4% y/y), Wednesday.
EUR/USD traded in a $1.1761-84 range and is at the bottom of that band in New York. Eurozone Q2 Gross Domestic Prpduct was confirmed at 2.0%. EUR/USD may get a bit of support as the latest surge of COVID-19 delta cases in the U.S. could take the pressure off Fed officials to begin tapering.
GBP/USD dropped from $1.3834 to 1.3787, on the back of broad U.S. dollar demand. Traders ignored a better-than-expected U.K. employment report, as it was due to the reopening of the economy. A break below $1.3750 would extend losses to $1.3610.
USD/JPY chopped about in a 109.13-109.42 range. Prices were weighed down by same haven demand for JPY and soft U.S. Treasury yields. Government officials plan to extend the Tokyo coronavirus emergency until September 12.
U.S. Retail Sales, Business Investment, Capacity Utilization and NAHB Housing reports are ahead. Fed Chair Powell speaks at 2:00 pm ET.
