Ahead of the US session open, a jump in the Canadian dollar was one of the biggest moves of the day following the inflation figures out today. The release of the Michigan consumer sentiment index that surprised to the upside provided an early lift to the weak dollar. However, the greenback was still down against most majors due to a heavy plunge in the prior few sessions. The dollar index fell around 0.30% to last trade at 93.36.
The Canadian statistics office issued a report signaling positive movement in consumer prices and gave hopes to investors about another potential rate hike this year by the Canadian Central Bank. Annual inflation accelerated to 1.2% in July, mirroring economists’ expectations and coming off the almost two-year low of 1% recorded in June. The average of the BOC’s three core inflation measures was 1.5%, rising from 1.4% in June and 1.3% in May that was the slowest since 1999. Investors ignored the monthly miss in the forecasted inflation figure (expected as a gain of 0.1%) as the number for July showed a 0.1% decline in the CPI. The loonie strengthened with the dollar/loonie pair tumbling immediately following the release to 1.2581 from 1.2656 before the release. The dollar managed to recoup some of the losses due to the consumer sentiment figures, with the pair last trading at 1.2595 in early hours of US trading.
Other forex majors either held on early gains or advanced further as the dollar continued weakening. The aussie was up at $0.7913 and the kiwi was last trading at $0.7322. The euro strengthened to $1.1747, while the pound was last at $1.2873.
The preliminary reading of the Michigan consumer sentiment index rose to 97.6 in August, beating expectations of 94.0 and rising above the 93.4 July figure. The dollar advanced on the data, though it offset only a small part of its earlier losses. Dollar/yen was last trading still below the 109 mark at 108.77.
The US currency hot hammered this week as investors continue to be worried about the most recent developments in Washington DC surrounding President Trump. Market participants lack confidence that the President and his administration have the ability to pass through any major legislation. The worries were renewed following the violence in Virginia and President’s actions and remarks regarding those events.
Gold prices were testing the $1,300 an ounce mark during late hours of European trading linked to the weakness in the dollar. However, due to the upbeat set of data from the University of Michigan on consumer sentiment, the dollar strengthened and gold prices gave up on some of their gains to last trade at $1,295.12 an ounce.
Oil prices were pressured ahead of the Baker Hughes oil rig count data that is due to be released later today. WTI was last trading at $46.97 a barrel and Brent was at $50.95.
