USD/CAD 1.0593 EUR/CAD 1.3616 USD/JPY 83.90
GBP/USD 1.5496 EUR/USD 1.2848 USD/CHF 1.0078
Commentary:
RISK ON, the USD is broadly lower against a basket of currencies on Wednesday on upbeat data from China and Australia. Stronger than expect Australian Q2 GDP of 1.2% blew past the consensus estimate of 0.9% as households spent far more than expected while exports enjoyed an Asian-driven boom, spurring speculation that a further rise in interest rates in the cards and leading to a surge in the AUD. Also, Chinese manufacturing rebounded in August after slowing for several months, easing concerns about the pace of global growth that are based on weakness in the U.S. Global equities are rallying this morning as the new month gets underway, lead by the commodity sector. This morning ADP Employment Change report for August came in weaker than expected, but so far it has not changed the risk on mood and thus the USD continues to move lower. The report indicated that private payrolls fell 10,000 last month versus an expected increase of 13,000. Private payrolls for the prior month were revised downward to reflect an increase of 37,000 payrolls. In Asia, the Yen moved lower after Japanese ruling party powerbroker Ichiro Ozawa, challenging Prime Minister Naoto Kan in a party leadership vote, said he would implement steps including intervention if the Yen rose sharply. Ozawa, in a showdown with Kan in the Sept. 14 vote for ruling party leader and hence prime minister, has a strong political base within the ruling Democratic Party that could threaten Kan's position. However, this morning's risk trade as wiped out those losses as the USD as moved lower versus the Yen. Market players believe the USD's recent drop against the Yen, largely driven by falling U.S. bond yields, would have to turn much more volatile or deeper for Japanese authorities to take action on the currency. In Canada, the CAD reversed its overnight losses against the USD as a return to the risk trade as push up global equities, oil, and gold. With no Canadian economic news for the rest of this week, all eyes will be on Friday's U.S. payrolls report, since the Bank of Canada has suggested that further interest rate hikes would be weighed against both domestic and global economic developments.
Disclaimer: Please note that any currency rates/prices contained in this document are indicative, and subject to change without notice. Prices quoted may vary substantially based upon the size of transaction and market volatility.
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