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Dollar Firms and Risk Aversion Fades

Categories: AUD, CAD, CHF, EUR, GBP, Markets, News, USD

The US traded higher overnight and opened in New York with gains against all the majors except for the Japanese yen.  US Secretary of State Rex Tillerson managed to calm a hysterical anti-Trump media warning of nuclear war.

The Reserve Bank of New Zealand (RBNZ) got things going at the Asia open.  They left their policy rate unchanged at 1.75%, as expected.  The outlook for the Overnight Cash Rate (OCR) was not as doveish as expected.  That gave NZDUSD a boost to 0.7366. However, a line in the statement about the need for NZDUSD to adjust down was revisited by Assistant Governor John McDermott, in a speech afterwards.  NZDUSD dropped and kept on dropping.  It is trading in New York at 0.7260.

Aussie rallied early but succumbed to the broad US dollar strength.  AUDUSD traded in a 0.7868-0.7909 band and opened at the low end of that range.

USDJPY continued to suffer the lingering effects from risk aversion sparked by Trump and North Korea.  It is starting today’s New York session at the bottom of the 109.83-110.17 overnight range.

Strong US data releases and stretched positioning weighed on EURUSD, which traded in a 1.1705-1.1769 range.  It opened at 1.1711.  Traders ignored a Reuters survey that said 28 out of 50 economists survey expected the ECB to announce tapering plans in September

Sterling traded erratically in a 1.2953-1.3013 range.  It peaked in Asia and bottomed out in the European morning.  UK data was mixed.  The trade deficit widened to GBP 4.56 billion while Manufacturing Production and Industrial production beat the May numbers.  GBPUSD bounced back to 1.2995 after the data was released.

The FTSE is taking a pounding.  It is down 1.09% as global equity indices trim gains, in part because of geopolitical risks.

USDCAD has continued to move higher as the “short squeeze” continues.  Traders are ignoring WTI oil prices that are trading steadily, just under $50.00/barrel.

Today’s US data includes Producer Price Index (forecast 2.2%, y/y), and Initial Jobless Claims with a speech by New York Fed President William Dudley.   None of that will be important.  Traders will watch US equity market developments (futures are trading lower) and be alert for fresh developments in the North Korea/Trump saga.

USDCAD traders only have third tier, New House Price data to content with, leaving broad US dollar moves to dictate direction.

Overnight Ranges

10-Aug-17 Open-6 am EDT High Low
USDCAD 1.2725 1.2732 1.2693
EURUSD 1.1711 1.1769 1.1709
USDJPY 109.87 110.17 109.83
GBPUSD 1.2992 1.3013 1.2953
USDCHF 0.9660 0.9667 0.9631
AUDUSD 0.7880 0.7909 0.7868
NZDUSD 0.7270 0.7366 0.7254
USDMXN 17.9316 17.9611 17.9089
WTI   49.93 49.96 49.52

 

USDCAD Technical outlook:

The intraday USDCAD technicals are bullish while prices are trading above 1.2680 and probing resistance in the 1.2730 area, as this is being written.  A decisive break will extend gains to 1.2770.  A move above 1.2770 could get nasty as there isn’t much in the way of resistance until 1.2940, the level the currency was at before the Bank of Canada cut interest rates.  For today, USDCAD support is at 1.2680 and 1.2650.  Resistance is at 1.2730 and 1.2770

Today’s Range 1.2680-1.2750

 

Agility Forex Author: Agility Forex

Agility Forex is a Canadian cross-border payment specialist. They are Canadian owned, operated out of Vancouver and are registered with Fintrac, the Canadian government agency that oversees the money transfer industry. They specialize in all things Canadian Dollar and aim to provide the best service and best pricing on all Loonie cross rates. Visit Agility Forex.

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