(MENAFN - Baystreet.ca) The Canadian dollar got knocked for a loop yesterday, and plunging oil prices were mostly to blame.West Texas Intermediate, the North American benchmark price for crudem dropped 4.8%, falling from $60.00 U.S./barrel to $57.10/b on reports of somewhat positive developments between Iran and the United States.President Trump's comments suggesting Iran was ready to negotiate about the latter's missile program fueled the selloff.Later, Iran said that its missile program was non-negotiable, and that news put a floor under prices.
Better-than-expected U.S. economic data contributed to the Canadian dollar selloff yesterday and overnight, in Asia.U.S. Retail Sales rose 0.4% in June, easily beating forecasts for a 0.1% rise, and that suggested the Federal Reserve could be more patient with its interest rate outlook.
The U.S. dollar opened in Toronto on a mixed note even though prices were little changed from yesterday's closing levels.AUD/USD gains in early Asia trading were reversed, contrasting with NZD/USD which help on to its gains as prices were underpinned by a better than expected GlobalDairyTrade auction result.
USD/JPY traded with a bullish bias, albeit in a narrow range.Prices were supported the Retail Sales data, which suggested the Fed may not need to cut rates as aggressively as previously expected.However, gains were capped by a dip in U.S. Treasury yields.
Trump's latest threats to slap tariffs on Chinese imports if the pace up trade talks didn't pick up were largely ignored.China added Commerce Minister Zhong Shan to its negotiating team. He is reportedly a hardliner, which suggests the trade talks will have a very long shelf life.
EUR/USD traded choppily in a narrow range. Euro-zone Consumer Price Index rose 1.3% year over year in June, higher than expected, but the news was ignored.Traders are looking ahead to the July 25 European Central Bank monetary policy meeting, concerned that new monetary easing measures may be announced.
GBP/USD stayed under pressure on fears that if (when?) Boris Johnson wins the Tory leadership contest to become the next British Prime Minister, he will call an early election. Johnson's latest comments about scrapping the Irish border deal are viewed as ensuring a "no-deal" Brexit is a certainty. Today's slate of U.K. data reports, (Retail Price Index, DCLG House Price Index, Producer Price Index, and Consumer Price Index) were mixed and only had a limited impact on GBP/USD trading.
Canada's inflation data was released today.Analysts expect June CPI to rise 2.0% year over year, compared to 2.4% y/y seen last month.The Bank of Canada expected inflation to fall, so if the forecasts for today's data are accurate, it won't be a surprise.However, at 2.0%, CPI is at the BoC's target, which reduces the need for lower rates, and that may stimulate Canadian dollar demand.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians