US Dollar Direction Drives Canadian Dollar (USD/CAD)

Stop overpaying with your bank on currency exchange. Get exchange rates up to 2% better than the Canadian banks with KnightsbridgeFX when buying or selling US dollars . “The Canadian dollar experienced wild price swings after the Federal Open Market Committee (FOMC) policy statement was released” Said Rahim Madhavji, President of KnightsbridgeFX , a currency exchange company that helps Canadians get better exchange rates than the banks. However, the Canadian dollar was unable to break out of its entrenched 1.2820-1.2920 trading range. FX traders were at a loss as to whether the FOMC statement was hawkish, dovish or a non-event and the price action on USD/CAD reflected the confusion. The Committee changed the wording on inflation slightly, from “continued to run below 2% “to “moved closer to 2%.” They didn’t provide any clues as to the pace of future rate moves. The day ended with the US dollar recording healthy gains across the board. The Canadian dollar was weak as well. USDCAD closed at 1.2878. Asian and European traders had a different view of the FOMC statement. They thought it was a tad dovish and sold US dollars. USDJPY traded down from 109.92 to 109.43 on the back of softer than expected US 10-year Treasury yields which couldn’t get back above 3.0%. It was also a national holiday in Japan which reduced liquidity and may have exaggerated the selling pressure. The Antipodean currencies were in demand. Broad US dollar weakness and a larger than expected Australia Trade Surplus underpinned AUDUSD which climbed from 0.7489 to 0.7538. The New Zealand dollar received help from the soft US Treasury yields as well as the general dollar weakness. NZDUSD rallied to 0.7538 from 0.7487. EURUSD added to Asia gains despite mixed economic reports. Eurozone inflation data was weaker than expected. CPI rose 1.2% y/y in April (forecast 1.3%), and March PPI was unchanged at 2.1%, y/y. The impact of the data was negated by an upbeat European Commission Spring Forecast. They expect 2018 GDP growth to remain strong and view the recent “cooling” as temporary. The continue to expect a gradual pick-up in inflation. EURUSD rallied from 1.1948 to 1.2007 on the news and is currently trading at 1.1990. Sterling moves mirrored those of EURUSD after the FOMC statement and in overnight trading. A GBPUSD rally from 1.3571 to 1.3628 was derailed by another economic report. UK Markit Services PMI at 52.8, was below the forecast but better than the March result. The reaction to this morning’s US and Canadian economic reports will be minimal. Traders will be on full-alert for headlines from Beijing where a US Trade delegation is meeting. Trading may be subdued ahead of Friday’s US employment report. Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians. FX Ranges 3-May-18 Range 2-May-18 Open High Low close EURUSD 1.1991 1.2007 1.1948 1.1941 USDJPY 109.52 109.87 109.46 109.92 GBPUSD 1.3602 1.3628 1.3571 1.3564 USDCHF 0.9969 0.9994 0.9957 0.9999 AUDUSD 0.7539 0.7538 0.7487 0.7489 NZDUSD 0.7019 0.7038 0.6993 0.6988 USDCAD 1.2821 1.2884 1.2823 1.2878 GOLD 1,312.60 1313.14 1305.48 1304.54 WTI   68.19 68.20 68.20 67.73
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