- Falling commodity prices weighing on Canadian dollar
- Eurozone data and hawkish ECB outlook support EURUSD.
- US dollar grinds higher overnight except against JPY and CHF.
USDCAD snapshot: open 1.3523-27, overnight range 1.1.3474-1.3532, close 1.3477, WTI $77.30, Gold $1986.18
The Canadian dollar added to yesterday’s losses overnight due to lower commodity prices from US recession risks.
Bank of Canada Governor Tiff Macklem is doing his part to undermine the loonie. Yesterday he told the Senate Banking Committee that he wasn’t concerned about the impact of higher US interest rates on the Canadian dollar. “That is not a major concern. We have an independent monetary policy; we have a flexible exchange rate."
Perhaps he should be. A weaker Canadian dollar is inflationary, which he is supposed to be driving lower.
The government of Australia was extremely unhappy with the performance of its central bank after officials failed to manage inflation risks. Governor Philip Lowe paid the price. He hoped that his expiring seven-year contract would be renewed. It wasn’t.
Canadian’s should have to wait for Mr Macklem’s term to expire. He should be ousted immediately. He missed the boat on inflation then exacerbated the problem by advising Canadian’s to strap on debt.
On June 15, 2020, he said “Our message to Canadians is that interest rates are very low and they’re going to be there for a long time. “If you’ve got a mortgage of if you’re considering making a major purchase, or you’re a business and you’re considering making an investment, you can be confident rates will be low for a long time.”
He hiked rates 425 bps since then. He needs to be held accountable.
EURUSD bopped about in a 1.0939-1.0972 range with prices testing both sides of the range when S&P Global-Hamburg Commercial Bank flash German PMI (HBOC) data was released.
The data showed an upturn in the German economy, but enthusiasm was tempered by a down tick in business expectations for the year ahead.
GBPUSD dropped from 1.2445 to 1.2379 in NY after Eurozone data suggested the ECB will be more hawkish than the Bank of England.
USDJPY traded negatively in a 133.68-134.29 range due to US recession risks knocking Treasury yields lower.
AUDUSD suffered from lower commodity prices and fell to 0.6679 from 0.6744. A 5.0% plunge in iron ore exacerbated the selling pressure.
Today’s US data includes the second tier Global PMI data.
