Article / 21 December 2017 at 22:22 GMT

US Wrap: Commodity currencies undermine US dollar

FX Trade Strategist / www.Loonieviews.net
Canada
  • US data mixed to soft led by drop in Q3 GDP 
  • Loonie soars on strong inflation and robust retail sales data 
  • Wall Street finishes with small gains 

By Michael O'Neill

NY focus: US and Canadian economic reports dominated the early morning. US Q3 GDP came in at 3.2% y/y, below the forecast of 3.3% while Initial Jobless Claims jumped to 245,000 (forecast 231,000).

At the same time, Canada's November inflation rose 2.1% y/y, and October Retail Sales jumped 1.5%. (forecast 0.3%). Loonie traders were impressed. USDCAD plunged from 1.2833 at the open to 1.270, before drifting higher into the close.

AUDUSD also rose, climbing from 0.7664 to 0.7704. USDJPY drifted lower, and GBPUSD was close to unchanged for the day.

EURUSD shrugged off Catalan election concerns and traded in a narrow 1.1850-1.1888 range. The polls have closed and the UK Guardian reports that the three pro-independence parties may win a small majority but not the popular vote.

Bitcoin was in the spotlight. Goldman Sachs is rumoured to be opening a bitcoin trading desk. In another twist, the Long Island Iced Tea Company changed its name to Long Blockchain and its stock soared nearly 200%. The digital currency dropped 7.45% today, falling from $16,466.98 to $15,240.20.

Wall Street finished with gains but the three major indices closed well off their intraday peaks in another low-volume session.

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 Loonie traders were impressed with Canada's inflation and retail sales numbers and USDCAD plunged from 1.2833 at the open to 1.270, before drifting higher. Photo: Shutterstock

Friday focus: The Christmas break will be the key focus for many traders across the globe. For others, the US Durable Goods and Personal Consumption Expenditures Price Index will be the main event. 

USDCAD will likely be the most volatile currency on Friday. Thursday’s Retail Sales data increased the risk for an upside surprise to Canada's October GDP (forecast 0.2%). If so, it would renew calls for a January rate hike and USDCAD will probe support at 1.2660.

USDCAD four-hour
saxo
Source: Saxo Bank. Create your own charts with SaxoTrader; click here to learn more 

Note: This is the final US Wrap for 2017. Happy holidays to all and best wishes for profitable trading in 2018.

– Edited by Gayle Bryant 

Michael O'Neill is an FX consultant, currency strategist and author of the Trade of the Day at Loonieviews.net. Follow Mike or post your comment below to engage with Saxo Bank's social trading platform.

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