US Growth in Q3 to Guide Dollar

The US dollar is mixed on Friday. Investor’s appetite for risk rose and safe haven currencies (JPY and CHF) fell while positive China and Brexit news saw the NZD, EUR, GBP and AUD advance against the USD. The Canadian dollar was dragged down in the last trading day of the week after softer than expected retail sales and inflation data. Next week’s Bank of Canada (BoC) monetary policy meeting is anticipated to bring a 25 basis point rate hike. Despite the miss inflation has been above the central bank’s target and businesses are optimistic about strong sales.

  • BoC expected to hike interest rate to 1.75%
  • German Business Climate to cool down
  • US first estimate of Q3 GDP to confirm solid growth

Euro Caught Between Brexit and Italian Budget

The EUR/USD fell 0.41 percent in the last five days. The single currency is trading at 1.1510 after rising on Friday due to a combination of softer US housing data and positive Brexit News. The gradual pace of rate lifts by the U.S. Federal Reserve had a negative impact on previously owned homes in September.



The euro rallied on Friday after a report that Theresa May’s government is ready to drop the time limit demand on the Irish border. The EU and the UK are said to be close to a deal, 90 percent by the estimate of the EU’s top negotiator, but the final 10 has proven hard to agree on.

Italian budget issues continue to drag on the euro. The threat of a downgrade of Italian debt does not seem to faze local politicians that are ready to square off against Brussels.

The European Central Bank (ECB) will publish its main refinancing rate and host a press conference on Thursday, October 25. No changes are expected, but investors need to be aware of the tone of the press conference as Mario Draghi could push a more dovish rhetoric.

Loonie to get BoC Rate Hike Boost

The USD/CAD fell 0.74 percent in a weekly basis. The currency pair is trading at 1.3117 and will look at the Bank of Canada (BoC) for support. The central bank is highly anticipated to announce a 25 basis points interest rate hike. The central bank has lifted rates twice in 2018 and rising inflation is forcing the hand of the BoC.


Canadian dollar weekly graph October 15, 2018

The rate decision has been priced in for some time, but the fundamental picture has worsened reducing the probabilities of a rate hike while still at near 80 percent. The NAFTA renegotiation was a big risk keeping the BoC awake at night, and with the USMCA some of that risk is lifted.

With inflation data lower than forecasted it now validates the gradual approach of the BoC and unless there is hawkish rhetoric from Governor Poloz, the loonie will continue to underperform against the USD.

Oil Drops as US Weekly Buildup Pressures Prices

West Texas Intermediate lost 0.95 percent this week. WTI is trading at $69.36 after staring a rebound on Friday due to surging Chinese demand. Supply concerns continue to guide daily price action. The US weekly inventories showed a buildup last week and pushed prices lower. Iranian exports have been cut ahead of the start of US sanctions, but there are reports that OPEC and other major producers are already closing the gap.



Saudi Arabia is embroiled in a diplomatic scandal and is quickly losing the goodwill it gained for having engineered price stability with the production cut agreement. The OPEC and major producers agreed to limit output to stop the free fall in energy prices and have extended the agreement to this year.

Trade war concerns eased on Friday as China and the US have agreed to meet during the sidelines of the G20 meeting in Buenos Aires. The leaders of the two nations will fly in a day ahead of the event to try and mend the trade relationship.

Gold Rises for Third Week Straight

Gold rose 0.6 percent last week. The yellow metal is trading at $1,229.40 despite gradual rate hike talk by Fed members and the minutes form the September FOMC. The rebound of the stock market correlated with the rise of the yellow metal. Safe haven appetite in gold holdings has returned and in a market with no shortage of geopolitical risk for the remainder of the year the yellow metal is set to continue on its rise.



Market events to watch this week:

Wednesday, October 24
10:00am CAD BOC Monetary Policy Report
10:00am CAD BOC Rate Statement
10:00am CAD Overnight Rate
11:15am CAD BOC Press Conference
Thursday, October 25
7:45am EUR Main Refinancing Rate
8:30am EUR ECB Press Conference
8:30am USD Core Durable Goods Orders m/m
Friday, October 26
8:30am USD Advance GDP q/q

*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

USD/CAD Canadian Dollar Falls Despite US Jobs Report Miss

The Canadian dollar fell against the US dollar on Friday despite a rebound in Canadian employment numbers and a miss in their American counterparts.

The loonie did advance against the greenback when the NFP report and the Canadian employment numbers were announced but as traders looked ahead to the long weekend they reduced their short US dollar exposures.


Canadian dollar weekly graph October 1, 2018

Canada added 63,300 positions in September driven by part time employment. The gain offset last month’s losses of 54,100 jobs that were also part time positions. The Bank of Canada (BoC) will have another solid datapoint to validate its upcoming monetary policy meeting that is being priced in at 85 percent probability of a rate hike.

The Canadian dollar is on track to end 0.29 percent lower versus the US dollar. Despite the headline jobs miss on the NFP report, the revisions and more importantly the inflation components still support a Fed rate hike in December. The CME’s FedWatch tool shows a 81.7 percent probability, down slightly from 83.3 percent yesterday.

US Jobs Report to Guide Markets

The US dollar is higher across the board versus major pairs ahead of the U.S. non farm payrolls (NFP) on Friday. The release of private payrolls on Wednesday at 230,000 jobs in September beat the market forecast of 185,000 positions. The NFP is expected to show a gain of 190,000 jobs when it is published on Friday, October 5 at 8:30 am EDT.

The U.S. Federal Reserve raised interest rates last week and strong fundamental data is putting the odds of a December rate hike at 83.3 percent as per the CME’s FedWatch tool. A strong jobs headline and more importantly a solid gain in hourly earnings will make a stronger case for a December rate hike.

  • NFP expected to show a gain of 190,000 jobs in August
  • Average hourly earnings forecasted to rise by 0.3 percent
  • Canadian jobs to rebound with a 25,000 position gain

Dollar Awaits Jobs Report

The EUR/USD is down 0.74 percent this week. The single currency is trading at 1.1517 before the release of the NFP jobs report. Fundamental data in the US has supported the USD at the same time that economic indicators have softened in Europe in tandem with rising concerns about the Italian budget.

Fed Chair Powell’s speech and press conference after the FOMC was a big factor in the rise of the dollar after the market had already priced in the 25 basis points lift to interest rates.



Chair Powell spoke on Wednesday and put forth a gradual rate hike path as the US economy continues to march onwards.

The monetary policy divergence between the Fed and other major central banks was clear last week as fundamentals back the US policy makers who will keep tightening, while questions remain on how effective other monetary policies around the world have been.

The euro regained some ground on Thursday, but investors will await the release of the US jobs report and if solid inflation signals appear will put the single currency under pressure.

Canadian Dollar Lower But Still Shielded by USMCA

The Canadian dollar fell on Thursday as the NFP report approaches. The ADP private payroll report beat the forecast on Wednesday and with it a strong probability of a December rate hike by the Fed.

The loonie is nearly flat on weekly trading as all the gains from the USMCA announcement are gone. The strong monthly GDP last Friday and the USMCA announced on Monday are still shielding the loonie from further loses.


usdcad Canadian dollar graph, October 4, 2018

The monthly Canadian GDP data released last week is driving higher expectations of a interest rate lift in October.

The Bank of Canada (BoC) held rates in September ahead of a highly anticipated Fed rate lift that came to pass.

The US central bank has forecasted another rate hike in 2018 and 2 or 3 more next year as part of its economic projections published Wednesday.

BoC Governor Stephen Poloz spoke last week addressing the rising inflation and Friday’s GDP data point puts a rate hike firmly on the table in the short term.

Employment data on Friday will give insight into what the next steps are for the BoC. The NFP will steal most of the spotlight but CAD traders will be expecting a recovery from last month where the economy lost 51,600 jobs.

The losses came mostly in part time positions, but investors will look for signs of wage growth as a positive and to validate the central bank lifting rates later this month.

Oil Tumbles After Rumors of Increased Supply from Saudi Arabia and Russia

Oil prices fell on Thursday after investors took profits on the latest rally.

The biggest factor impacting energy markets is the looming sanctions against Iranian exports. The Iranian supply disruption offset the large inventory data point on Wednesday. Reports of Saudi Arabia and Russia ramping up production to cover the shortfall in supply took energy prices lower.


West Texas Intermediate graph

The drop in supply has kept prices higher with all eyes on Saudi Arabia waiting for signs a production increase after US President Donald Trump has called out the OPEC to do something to bring prices down.

Gold Pressured by Strong Dollar

Gold lost on Thursday, but is still higher on a weekly basis.

The anticipation for the NFP report on Friday could point to another interest rate hike and further pressure the yellow metal.

The Fed raised the benchmark rate by 25 basis points and the futures market is pricing in a 78.5 percent probability of a lift in December.

Friday’s U.S. non farm payrolls (NFP) will be the final test of the yellow metal.



The US is expected to add 190,000 jobs with average hourly earning rising 0.3 percent.

Higher inflation expectations validate the Fed’s forecasts and the market is pricing in a rate hike in December and follow ups in 2019.

Market events to watch this week:

Friday, October 5
8:30am CAD Employment Change
8:30am CAD Trade Balance
8:30am USD Average Hourly Earnings m/m
8:30am USD Non-Farm Employment Change

*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

Strong Dollar Awaits Jobs Report to Validate Further Fed Hikes

The US dollar is mixed against major pairs on Friday. The dollar gained against the JPY, EUR, GBP and CHF but depreciated against the commodity pairs (CAD, AUD and NZD).

Fundamental data in the US supported the dollar: the Fed delivered its anticipated third rate hike of 2018, the final GDP for the second quarter was 4.2 percent. Fed Chair Powell’s speech and press conference after the FOMC was a big factor in the rise of the dollar after the market had already priced in the 25 basis points lift to interest rates. Mr Powell will speak next week on Tuesday, October 2nd on the topic of employment and inflation. This will officially kick off jobs week in the US.

The main event will be the release of the biggest economic indicator on Friday, October 5 at 8:30 am when the U.S. non farm payrolls (NFP) is published.

  • US manufacturing and service PMIs could signal growth slowdown
  • UK leading indicators expected to remain flat
  • US NFP report to show economy added 190,000 jobs

Euro Hit by Political Turmoil and Inflation Softness

The EUR/USD lost 0.26 percent on Friday. The single currency is trading at 1.1610 and accumulated 1.16 percent in losses during the week. A higher than predicted Italian budget for 2019 at 2.4 percent and softer core inflation in the eurozone put downward pressure on the currency.



European stock markets were hit by the news as political turmoil once again threatens the European Union.

The other shoe dropped when inflation slowed down in the Eurozone in the same week that the U.S. Federal Reserve hiked rates and was optimistic about economic growth in the US.

The monetary policy divergence between the Fed and other major central banks was clear this week as fundamentals back the US policy makers, while questions remain on how effective other policy makers around the world have been.

Loonie Rises as GDP Data Validates October Rate Hike

The Canadian dollar rose on Friday after the monthly gross domestic product (GDP) beat the forecast with a 0.2 percent gain. The loonie is up almost 1 percent on the final day of the trading week. The currency is still showing a weekly loss against the greenback as NAFTA uncertainty and the U.S. Federal Reserve rate announcement put downward pressure.

The rise today comes with higher expectations of a Canadian interest rate lift in October. The Bank of Canada (BoC) held rates in September ahead of a highly anticipated Fed rate hike in September that came to pass. The US central bank has forecasted another rate hike in 2018 and 2 or 3 more next year as part of its economic projections published Wednesday.


usdcad Canadian dollar graph, September 28, 2018

BoC Governor Stephen Poloz spoke on Thursday addressing the rising inflation and Friday’s GDP data point puts a rate hike firmly on the table in the short term.

NAFTA negotiations have not made big inroads as the US met with Canada with the goal of turning two bilateral agreements into a trilateral one.

With a considerable amount of work still to be done in bridging the gap between US and Canada, the US-Mexico agreement will be published tonight with a possibility of leaving the door open for Canada to join.

It is that possibility that has kept the loonie gaining despite the NAFTA train moving without Canada.

Crude Surges as Supply Concerns Push Prices to 4 Year Highs

Oil prices surged on Friday as supply concerns took crude to four year highs. The news that China is cutting back on Iranian oil purchases triggered a rally where Brent and WTI had a 1.40 percent one-day gain. Brent is on track to a 5.34 percent gain during the week with WTI clocking in at 3.66 percent.

The US sanctions against Iran don’t kick into effect until November, but the harsh penalties threatened against those who do have made Iranian crude purchases drop.


West Texas Intermediate graph

China’s Sinopec Corp is slashing its loadings in half to avoid the wrath of Washington. In August Sinopec planned to offer Tehran a lifeline by circumventing the sanctions as it reduced US oil purchases due to the rising trade turmoil between the US and China.

The decision by the Chinese state owned energy company will deal a huge blow to Iran as China is its biggest customer.


West Texas Intermediate graph

The shortfall from Iranian crude sales does not have a short term solution after US Energy Secretary Rick Perry said earlier this week that the US would not tap into its emergency crude reserves to bring prices down.

US President Donald Trump had implied during his UN General Assembly speech that unless the OPEC increase production levels America’s would utilize its position as the largest energy producer in the world.

Gold Gains But US Dollar to Limit Recovery

Gold rose 0.67 percent on Friday but the strength of the US dollar after the U.S. Federal Reserve lifted interest rates this week proved to be too much for the yellow metal that will end up losing 0.49 percent on a weekly basis.

The Fed raised the benchmark rate by 25 basis points and the futures market is pricing in a 78.5 percent probability of a lift in December. Gold traders will look ahead at next week’s manufacturing and service PMIs for more guidance as the US economy continues to grow. Friday’s U.S. non farm payrolls (NFP) will be the final test of the yellow metal.



The US is expected to add 190,000 jobs with average hourly earning rising 0.3 percent. Higher inflation expectations validate the Fed’s forecasts and the market is pricing in a rate hike in December and follow ups in 2019.

Market events to watch this week:

Monday, October 1
4:30am GBP Manufacturing PMI
10:00am USD ISM Manufacturing PMI
Tuesday, October 2
12:30am AUD Cash Rate
12:30am AUD RBA Rate Statement
4:30am GBP Construction PMI
12:45pm USD Fed Chair Powell Speaks
Wednesday, October 3
4:30am GBP Services PMI
8:15am USD ADP Non-Farm Employment Change
10:00am USD ISM Non-Manufacturing PMI
10:30am USD Crude Oil Inventories
Thursday, October 4
9:30pm AUD Retail Sales m/m
Friday, October 5
8:30am CAD Employment Change
8:30am CAD Trade Balance
8:30am USD Average Hourly Earnings m/m
8:30am USD Non-Farm Employment Change

*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

Mexican Peso Dragged Lower as Oil Falls on Trump’s OPEC Comments

The Mexican peso fell on Thursday on the back of oil losses that were triggered by comments from US President Donald Trump. Oil fell after Trump targeted the Organization of the Petroleum Exporting Countries (OPEC) for not doing enough to keep crude prices low.

This comes ahead of the organization’s meeting in Algeria with other major producers. The production cut agreement has been the most important factor in the stabilization of crude prices since the 2014 drop. Supply disruptions have kept prices in current ranges even as the OPEC and partners such as Russia will be discussing ramping up production.



Mexico joined the efforts led by Saudi Arabia and Russia to stabilize the oil market by curbing production. The tweet by President Trump indirectly affects OPEC’s partners like Mexico and Russia.

NAFTA talks continue today between the US and Canada with both sides remain optimistic but an agreement does not seem to be in the cards in the short term. Canada is facing pressure from the US and Mexico as both have political timelines that have to be met to insure a quick approval. Canadian Foreign Affairs Minister Chrysta Freeland remains committed to get the best deal for Canada and after 13 months of negotiation will not compromise for the sake of a quick deal.

NAFTA hopes are keeping the peso immune from emerging market contagion, but as US-Canada negotiations drag on, that protection will begin to wear off.

Dollar Softens as Trade War Fatigue Sets In OANDA MarketBeat

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The dollar bounced back on Friday, after a couple of economic indicator misses last week, the greenback ended higher against all major pairs but was back under pressure on Monday.

A slowdown in the pace of inflation, miss in retail sales expectations and a softer tone on trade from the Trump administration are the three major factors for the softness of the currency.

Interest Rate differentials are a positive factor for the the US Dollar but haven’t done enough to counter the trade war fatigue setting in.

USD/CAD Canadian Dollar Lower on Friday But Weekly Gains on NAFTA Hope

The Canadian dollar fell on Friday. After the Trump administration softened its stance on international trade, in particular by reopening trade talks with China, NAFTA optimism boosted the loonie. Traders did not feel confident in carrying over short dollar positions into the weekend and the greenback saw a recovery on Friday.


usdcad Canadian dollar graph, September 14, 2018

The loonie advanced 1 percent during the week and next week’s inflation and retail sales data on Friday are crucial for the fate of a Bank of Canada (BoC) interest rate hike. NAFTA headlines will roll in as the team of negotiations get back to work with the aim to add Canada to to US-Mexico agreement.

Expectations are mixed on NAFTA, as Canada seems ready to make concessions on dairy but the US and Mexico continue to press for a trilateral deal while also adding they are ready to forge ahead if its only a bilateral one.

AUD/USD – Aussie Jumps After US-China Trade Talk Hope

The Australian dollar jumped by 0.71 percent after reports said that US Treasury Secretary Mnuchin is planning to meet with China in two weeks. Trade war tensions have been pressuring China’s commercial partners as the Asian giant sought to bring in the WTO into the conflict.



The Aussie bounced back from a 29 month low as a potential de-escalation of the two largest economies trading tariffs. Although it is too early to anticipate a positive outcome of the yet to be scheduled talks, at this stage a show of goodwill is giving the currency some breathing room.

Dollar Higher as Risk Appetite Vanishes

The US dollar appreciated versus most major pairs on Friday. The Japanese yen outperformed the greenback as a safe haven, but all other major currencies suffered heavy losses during the week. Tense trade developments between China and the US and Friday’s drop in the Turkish lira dragged emerging and developed markets lower as US sanctions were doubled. Geopolitics drowned out most of the impact of economic releases with US inflation hitting a new high and Canadian part time jobs driving a drop in the unemployment rate.

  • Turkish lira fell more than 20 percent in a week
  • US retail sales to remain subdued
  • UK retail sales to show more evidence of solid summer

European Bank Exposure to Turkey Hits EUR

The EUR/USD lost 1.2 percent in the last five days. The single currency is trading at 1.1398, with the pair looking to fall further after breaking through the 1.14 barrier. The economic calendar does not feature major events in Europe and with current geopolitical tension the single currency remains vulnerable against the safe haven dollar.



US inflation is 2.94 percent, and with core inflation is back to 2008 levels at 2.4 percent the case for two more rate hikes by the U.S. Federal Reserve this year remains strong. The monetary policy divergence between the European Central Bank (ECB) and the U.S. Federal Reserve has been a factor, but remains in the background as geopolitical forces have proven to have a bigger impact in 2018.

Italian, Spanish and French banks are reported to have loans worth $150 billion in Turkey. The falling Turkish lira will make those loans denominated in foreign currency harder to repay which is why the EUR has touched record lows on Friday. The European stock market has already witnessed a sell off of financial institutions.

Turkey President Erdogan was defiant and called for the population to defend the currency by selling their US dollars and gold holdings instead of trying to open a dialogue with the US regarding steel tariffs.

Loonie Grounded Despite Strong Jobs Report

The USD/CAD gained 0.77 percent during the week. The Canadian dollar is lower on Friday. The USD/CAD is trading at 1.3145. Statistics Canada released a stronger than expected employment report with a huge gain of 54,100 jobs driving the unemployment rate down to 5.8 percent in July. The loonie failed to gain momentum from that economic indicator release given the current geopolitical climate.


Canadian dollar weekly graph August 6, 2018

A flight to safety from investors has given a boost to traditional safe havens like the JPY, CHF, USD and gold. The Turkish lira has been in free fall and has triggered contagion fears as Spain, Italy and France have high exposures.

The strong jobs report adds to the probability the Bank of Canada (BoC) will hike the benchmark interest rate one more time in 2018. The BoC raised its overnight target rate to 1.50 percent on July 11 with the growth of the economy picking up for a follow up rate hike in October.

The Canadian currency was lifted by the solid jobs report, but not enough to send the loonie into the black on Friday. The indicator comes during a tense trading environment where risk appetite is subdued. 

Pound Lower on Brexit Despite Strong GDP Numbers

The GBP/USD lost 1.64 percent in the last five days. The currency pair is trading at 1.2755 near a one year low after no deal Brexit probabilities rose. The divorce negotiations between the UK and the EU have been short on positives with an 8 month period to sort out a lot of tough negotiations.



The market has priced in the scenario of the UK exiting the single market with no trade deal in place. The ball is back on the government of Theresa May to come up with a package that not only satisfies supporters at home, but more importantly is acceptable for the EU. So far that balancing act has not been achieved and has put the leadership of Theresa May into question with an almost imminent vote of confidence in the near term.

The decision of the Bank of England (BoE) to lift rates last week was unanimous, but it could end up being the only pro-active decision by the central bank in 2018 as it heads into reactive territory.

Yen Keeps Up With Dollar in Turbulent Times

The USD/JPY lost 0.51 percent during the last five trading sessions. The currency pair is trading at 110.59. The Japanese currency has appreciated but it has done so less than other times of uncertainty in the market. The use of economic sanctions by the Trump administration was a recurring theme this week causing high volatility in emerging markets.



The JPY continues to trade in a tight range despite the global uncertainty but the safe haven appeal of the currency has set it apart from other Asian currencies that have depreciated as trade war concerns rise.

Market events to watch this week:

Tuesday, August 14
4:30am GBP Average Earnings Index 3m/y
9:30pm AUD Wage Price Index q/q
Wednesday, August 15
4:30am GBP CPI y/y
8:30am USD Core Retail Sales m/m
8:30am USD Retail Sales m/m
10:30am USD Crude Oil Inventories
9:30pm AUD Employment Change
Thursday, August 16
4:30am GBP Retail Sales m/m
8:30am USD Building Permits
7:30pm AUD RBA Gov Lowe Speaks
Friday, August 17
8:30am CAD CPI m/m

*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

USD/CAD Canadian Dollar Lower on Contagion Fears

Canadian Jobs Impress but Loonie Lower on Global Contagion Fears

The Canadian dollar is lower on Friday. The USD/CAD is trading at 1.3083. Statistics Canada released a stronger than expected employment report with a huge gain of 54,100 jobs driving the unemployment rate down to 5.8 percent in July. The loonie failed to gain momentum from that economic indicator release given the current geopolitical climate.

A flight to safety from investors has given a boost to traditional safe havens like the JPY, CHF, USD and gold. The Turkish lira has been in free fall and has triggered contagion fears as Spain, Italy and France have high exposures.


usdcad Canadian dollar graph, August 10, 2018

The strong jobs report adds to the probability the Bank of Canada (BoC) will hike the benchmark interest rate one more time in 2018. The BoC raised its overnight target rate to 1.50 percent on July 11 with the growth of the economy picking up for a follow up rate hike in October.

The Canadian currency was lifted by the solid jobs report, but not enough to send the loonie into the black on Friday. The indicator comes during a tense trading environment where risk appetite is subdued.