DAILY FX WRAP: Quiet trade amid the North American holidays, USD edges lower
Havens have garnered strength due to a risk off approach following the North Korea nuclear test. This resulted in USD/JPY falling 0.60%, settling just above 109.50, while USD/CHF fell 0.90%. Gold rose to YTD highs just shy of USD 1,340/oz, the highest level seen since September 2016.
The AUD is trading softer ahead of tonight’s RBA meeting, with futures indicating that rates will be kept on hold. Focus will be on the currency after the RBA’s last statement noted that the higher Aussie was contributing to subdued price pressures and weighing on the outlook for employment and output.
The EUR is generally higher across the board but hasn’t managed to eek out gains against safe havens. ECB President Mario Draghi is expected to address the value of the EUR at the conclusion of the central bank’s meeting on Thursday; last week sources stated that the high value of the EUR was worrying some ECB policy makers.
GBP traded sideways against the USD for majority of the session. The weekend saw UK Brexit Minister David Davis deny reports that the UK has agreed to pay a EUR 50bln Brexit bill, while the EU and the UK continue to blame each other for a lack of progress. The latest round of sources reports have suggested that the UK is proposing to extend the next round of Brexit negotiations with the EU until a breakthrough on the UK’s “exit bill” is reached to push the issue forward in time for the European Council meeting in October. EUR/GBP has remained bid, but pared back from its best levels.
The CAD has fallen 0.2% against USD, with the BoC set to issue its latest monetary policy decision on Thursday. Analysts expect the central bank to keep its benchmark rate on hold, while markets price in a 50% chance of a 25bps hike. The CAD has traded in relatively sideways fashion throughout the latter part of the session as oil prices have been stable, with no new information about the re-opening of major oil refineries/pipelines after Storm Harvey or any damages/cost of repairs in the holiday-shortened US session.