Welcome back, Canada. The US dollar is starting the day on a firm note compared to Friday’s close. That is thanks to a robust US ISM report on Monday and a toning down of hawkish expectations by ECB officials.
Yesterday, ISM Manufacturing PMI rose 57.8 vs. forecast of a 55.2 rise which reminded traders that US economic growth was still chugging along. EURUSD traded lower in a tight range even after a Reuters story citing “sources: claimed ECB officials were “unnerved” by the market’s reaction to Draghi’s earlier speech.
Overnight, EURUSD dropped, popped, and then dropped again and opened this morning at the lows. Weaker than expected Eurozone PPI data weighed on the single currency.
USDJPY rallied from 111.84 to 113.45 yesterday, fueled by rising treasury yields ahead of Wednesday’s FOMC minutes release. Those gains were pared back in Asian and early European trading but the move lower was not sustained. North Korea’s announcement of a successful long range missile test may have unnerved some traders.
Sterling peaked at 1.3020 early on Monday and then retreated as traders revaluated the prospects for a UK rate hike. GBPUSD traded in a 1.2915-1.3020 range is just above the low as this is being written.
AUDUSD traders were busy. A surprisingly strong Retail Sales report (Actual 0.6% vs. forecast 0.2%) drove the currency pair from 0.7650 to 0. 7680.. Some traders were disappointed when the Reserve Bank of Australia left interest rates and the policy statement unchanged. AUDUSD dropped from 0.7680 to 0.7590. The New Zealand dollar traded softer as well.
Oil prices have held on to yesterday’s gains. WTI rallied from $45.92 to $47.05 overnight and started today’s session at $46.94/b.
USDCAD has been consolidating its recent losses. It was unable to break below support in the 1.2950 area and has spent the last 24 hours inside a 1.2965-1.3010 area. The weekly Commitment of Traders report shows speculators on the IMM have reduced their short CAD/Long US positions, however, they are still large. Traders expect the Bank of Canada to raise interest rates on July 12 and again in October.
US Markets are closed for July 4th celebrations. Canadian markets, while open, will be very quiet. Wednesday release of the FOMC meeting minutes provides added incentive to do nothing as traders wait to see how hawkish/doveish the Committee really is.
|4-Jul-17||Open-6 am EDT||High||Low|
USDCAD Technical outlook:
The USDCAD technicals are bearish. Downtrend lines that come into play at 1.33 and 1.3100 will keep the focus on support in the 1.2950-65 area which represents Fibonacci levels and prior bottoms. A decisive break below 1.2950 will extend losses to 1.2770 and possibly 1.2460. For today, USDCAD will consolidate inside a 1.2950-1.3010 range
Today’s Range 1.2950-1.3005
Chart: USDCAD 30 minute
This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.
Last update: 22 Feb, 2020
The strong start to the year for “risk-on” currencies is already a distant memory.
Posted: 3 Feb, 2020
The threat of a proxy war between the US and Iran in Iraq has pared back some of the recent gains of “risk-on” currencies.
Last update: 8 Jan, 2020