Forex news for North American trading on August 31, 2017:
- Canada Q2 GDP q/q annualized +4.5% vs +3.7% expected
- US personal income for July 0.4% vs 0.3% est. Personal spending 0.3% vs 0.4% est.
- Initial jobless claims 236K vs 238K expected
- US July pending home sales -0.8% m/m vs +0.4% expected
- Chicago PMI 58.9 vs 58.5 expected
- Hurricane Irma likely to grow into Category 4 storm. Could hit wide range of US
- July Dallas Fed trimmed mean +1.4% vs +1.5% prior
- Mnuchin: Sept 29 is still the debt ceiling deadline
- The Atlanta Fed GDPNow estimate 3.3% vs 3.4% last
- CIBC now sees Bank of Canada rate hike in September
- Does the latest US Challenger job cuts data set the tone for NFPs?
- EU's Barnier says UK position on Brexit divorce amount is unacceptable
Markets:
- Gold up $14 to $1322
- WTI crude up $1.13 to $47.09
- S&P 500 up 14 points to 2471
- US 10-year yields down 1 bps to 2.12%
- CAD leads, NZD lags
- CNY and CHF lead on the month, NZD lags
The Canadian dollar was the start performer on the great GDP reading. The initial reaction in USD/CAD was a fall to 1.2570 from 1.2650 but a closer look at the details led to more selling and the pair fell all the way to 1.2477 and finished at the lows of the day.
Part of the decline was a late-day slump in the US dollar. Mnuchin got a bit of the blame after he said a weaker dollar was better for trade but that took the comments out of context. Worries about a weak nonfarm payrolls (see this preview for why) and month-end flows were probably a bigger part of the story.
In any case, USD/JPY slumped down to 109.96 from a high of 110.67, with all the selling coming in North American trade.
The euro had fallen in Europe on an ECB sources story fretting about the currency. IT hit 1.1822 but climbed all the way back to 1.1909 at the end of the day.
Cable also made a round trip as it fell to 1.2850 but found some bids there and climbed up to 1.2925 by the end of the day.
Not to be left out, even the Aussie caught a bid and climbed to 0.7944 from a five-day low of 0.7886.
The non-farm payrolls report on Friday should bring plenty of drama but I get the feeling the dollar is being sold on the rumour and will be bought on the fact, no matter the numbers.
