Forexlive Americas FX news wrap. Oh Canada! Bank of Canada hike sends CAD sharply higher.
Forex news for North American traders on September 6 2017.
- US stocks come off the highs into the close, but end the day with gains
- Forex technical analysis: AUDUSD will need to weather it's own storm of data
- US crude oil futures are settling up on the day
- The best thing you will read about cryptocurrencies today
- Beige Book: Activity expanded at modest-to-moderate pace
- Trump upbeat about conversation with China's Xi
- USDJPY moving back higher after debt/hurricane relief news
- US dollar climbs on reports of debt limit deal
- Debt limit deal between Democrats and Republicans done - report
- Trump says he will support 3-month debt limit extension
- UK postpones next week's retail sales report
- Bitcoin moves higher on BOC hike, hurricane concerns ; )
- ECB draft forecasts said to cut inflation forecast slightly - report
- Hurricane Irma continues to rage as massive disaster looms
- Forex technical analysis: EURCAD falls to 200 day MA/swing lows
- Fed's Fischer announces resignation
- Forex technical analysis: BOC's hike sends the USDCAD crashing lower (quickly)
- Breathtaking move in the Canadian dollar after the Bank of Canada hike
- Full text of the Bank of Canada decision - Sept 6, 2017
- US ISM non-manufacturing composite index 55.3 vs 55.6 est.
- Bank of Canada interest rate decision 1.00% vs 0.75% prior
- Goldman Sachs says the risk of a government shutdown is dwindling, for now
- Aug final Markit US services PMI 56.0 vs 56.9 expected
- Canada July international merchandise trade -$3.04B vs -$3.30B expected
- Canada Q2 labour productivity -0.1% q/q vs +1.4% prior
- US trade balance for July -43.7b vs. -44.7b estimate
- The EUR is the strongest while the NZD is the weakest as NA traders enter
A snap shot of other markets near the close shows:
- Spot gold down -$5.38 or -0.40% to $1334.28
- WTI crude oil is ending up $0.41 or 0.88% to $49.08
- US stocks ended the session higher with the S&P up 0.31%, the Nasdaq up 0.28% and the Dow up 0.25%
- US yields rebounded after the sharp fall yesterday. 2 year 1.298%, up 0.8 bp. 5 year 1.6808%, up 3.9 bp. 10 year 2.1029%, up 4.3 bp. 30 year 2.722%, up 4.2 bp
The Bank of Canada, hiked rates by 0.25% to 1.00%. This was the 2nd consecutive rise of 0.25% for the Bank of Canada. There was a 41% chance of a hike according to the market before the decision.
Moreover, the BOC said, "Future monetary policy decisions are not predetermined and will be guided by incoming economic data and financial market developments". That leaves the door open for another hike in 2017. The market has priced the probability of another hike in October at 35.6%, with a 50% chance for one more before year end. The chance for two more hike between now and year end is 18.2%.
Although the probability of a hike today was 41%, the market acted like it was 0%. The price of the USDCAD was trading within about 60 pips of the double bottom 2017 lows before the announcement. In the first minute after the report, the price went from 1.2405 to 1.2126. That is a fall of 279 pips. In the process the price fell below the 50% of the move up from the 2012 low at 1.21608. Again. that happened in the 1st minute.
The corrective high off the low took the price racing up to 1.2250 in the next two minutes (124 pips). The rest of the day, the pair traded in a relative quiet range between 1.2250 and 1.2184 (66 pips), with an inside range between 1.2206 and 1.2244 (only 38 pips - see the yellow area in the chart above).
Other than that blockbuster news, the other fundamental news showed a US trade deficit of -43.7B. This was a little better than expected but is more toward the high end of the deficit range in the US. Canada also had a trade deficit.
US ISM Non-manufacturing composite index came in at 55.3 vs 55.6. This was up from the prior month but down from highs of the year.
Stanley Fischer, the Vice Chair of the Fed, announced that he will be leaving the Fed in October. Personal reasons were cited for his departure. His departure will leave the Fed board with only 3 members. The normal number number is 7. If Yellen is to not be reappointed when her term is up in January, that would give Trump a lot of leeway in determining the bias of the Fed. After the close today, Dow Jones is reporting that Trump will likely not nominate Gary Cohn for the Fed chair after Yellen's term is up. The report said Trump was not pleased with the criticism Cohn publicly made after the white supremacy events in Charlottesville, Virginia. Cohn is Jewish and anti-Semitic chants were prevalent during the event.
The President said that an agreement was made to kick the can down the road with regard to the debt ceiling. He will support a 3 month extension with support for victims of Hurricane Harvey included. The announcement helped the dollar move higher a bit in the NY afternoon session.
Later in the day, the Fed's Beige book was released. The Fed said that activity expanded at a modest to moderate pace (CLICK HERE for the details).
The other news event that is beginning to dominate (at least the attention of traders) is the hurricane Irma. The category 5 storm is breaking records for sustain wind speeds as it works it's way through the Caribbean. The storm is expected to hit Florida over the weekend although the path is not fully clear just yet.
Technically, the EURUSD waffled back and forth as the market prepares for the ECB and Draghi tomorrow. The pair trades around the 100 and 200 hour MAs at 1.1902 to 1.1921.
The GBPUSD moved up to the 61.8% retracement at 1.30784 (high reached 1.3081) and fell back off. The 50% of the August range comes in at 1.3020. Those two levels define the range for the pair as the market eyes the next break.
The USDJPY closed closer to the highs. The debt ceiling news helped to push the pair to new highs in the afternoon session. The 100 and 200 hour MA remain as a hurdle to get above if the buyers are to take more control. They come in at 109.48-51 currently.
Below is the % changes of the major currency pairs vs each other . While the CAD lapped the field to the upside, the NZD was the weakest currency for the day.