Today is the fourth day in a row of USD lower prices, the euro and the GBP both have shown resilience against the currency. Two main factors impacted the USD, expectations of better economic growth in Europe, and the German central bank’s decision to include the Chinese yuan in its own reserves was another factor dragging on the dollar. Amid greenback weakness, currencies and equities in developing nations rallied. The peso benefited after reports the U.S. was softening its stance toward Nafta talks.
Oil prices are better, approaching the $65 USD level for West Texas Intermediate, OPEC continues to reiterate that production cuts will remain even as oil has reached these levels.
USDCAD 1.2405, 1.2395, 1.2379 1.2462, 1.2477, 1.2481
EUR-USD clocked a fresh 37-month at 1.2296. Friday’s hotter than expected U.S. CPI data, and decent retail sales data, which were followed-up by relatively hawkish remarks from Fed member Rosengren, who said that he now favours more than three 25 bp rate hikes this year. This should help market participants justify picking up dollars on dips. The head of the Bundesbank Weidmann, a hawk by reputation, also played down the prospects of a rate hike anytime soon in remarks he made late on Friday. EUR-USD has been trending decidedly upward, however, with last Thursday’s release of hawkish-leaning ECB minutes having been the latest prompt. EUR-USD has near-term support at 1.2200.
USD-CAD has retreated to the mid 1.24s after logging a high-for-the-year at 1.2590 last Thursday. A broader retreat in the U.S. dollar coupled with Loonie-supporting reports of a possible breakthrough in NAFTA negotiations, have weighted on USD-CAD. A lot of focus will remain on the NAFTA negotiations, with uncertainty about this having curtailed the Canadian dollar rallying amid the surge in oil prices and expectations for the BoC to hike interest rates by 25 bp this Wednesday. Ahead into 2018, how the U.S. dollar benefits from the expected tax overhaul, how oil prices evolve, how NAFTA re-negotiatios go, and how the BoC proceeds with its slow-go tightening cycle will be dominant themes for USD-CAD.