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Greenback recovers ahead of Canadian GDP tomorrow

Posted on: August 30, 2017

Risk-off sentiment faded yesterday as participants seem to shrug off North Korea's missile tests. USD was well bid overnight and that has continued this morning thanks to strong ADP Employment and GDP numbers. In a possible preview of Friday's NFP, ADP was +237k compared to expectations of +185k. Meanwhile, US GDP came in at 3% compared to expectations of 2.7%, boosted by strong Personal Consumption numbers. EURUSD tested 1.1900 after the number while a combination of a risk-on mentality and strong US data has helped USDJPY regain a 110 handle.

Canada also received some good news on the data front this morning, as the trade balance was better than expected. However, USDCAD has still moved higher on the strong numbers south of the border. Tomorrow of course is the highlight of the week for the Canadian dollar as we get Canadian GDP numbers. In USDCAD the risk is certainly to the upside based on positioning, and a weak GDP number could spark a short squeeze. 1.2565/75 is the first level on the top side to watch with key support remaining in the 1.2414/1.2434 band.

Across the water, euro-zone economic sentiment rose to the highest level in a decade. This is also reflected in the currencies strong momentum, being up over 14% against the dollar this year, along with being the best performer among developed market currencies. On September 7, ECB officials will meet to discuss the future path of its QE program. Policymakers are fully aware of the stronger euro and its corresponding pressures on export competitiveness, so I do not expect them to be jumping to conclusions.

    Yesterday's NA 1.2469 - 1.2550
  • Asia 1.2501 - 1.2534
  • London 1.2519 - 1.2569

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