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Loonie Flying High on Rate Talk and Oil

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USDCAD broke below the psychologically important 1.3000 level again during the Asia session. The decline stalled above major support in the 1.2965 and is currently flirting with 1.3000 again.

The Asia session kicked off with a host of economic data reports from Japan, including CPI, Employment, and Industrial Production.  M Inflation was unchanged at 0.4%, y/y, the unemployment rated ticked up to 3.1% from 2.8% and Industrial Production was -3.3%.  USDJPY eased from 112.14 to 111.95, then retraced the move in Europe.

China Official Manufacturing PMI for June was 51.7 vs forecast of 51.0. AUDUSD and NZDUSD rallied on the news, but only Kiwi held on to them.  AUDUSD rose from 0.7677 to 0.7709 and then drifted lower, making a low of 0.7670 in Europe. It inched higher into the New York open. NZDSD rose from 0.7294 to 0.7333, which is where it was at the start of New York trading.

EURUSD did not go anywhere in Asia but sank in Europe, falling from 1.1344 to 1.1393 which is where is was at the start of today’s session. The move is being chalked up to an “overdue” correction. Selling was encouraged by a dip in June headline Eurozone CPI to 1.3% from 1.4% in May. However, core CPI beat the estimates and rose to 1.2% from 1.0%.

GBPUSD traded higher in Asia, rising from 1.2995 to 1.3028. A mix of profit taking and a modest bounce in the broad US dollar led to a drop to 1.2880, where it opened

Oil prices moved higher rising to a peak of $45.39.  This week’s price gains have a lot to do with US dollar weakness and quarter-end position adjustments rather than a rebalancing of supply and demand.

FX markets will be very busy in the morning and a very dull in the afternoon. US data releases include Personal Income and Spending, Chicago PMI, and Michigan Consumer Sentiment. Upside surprises with this data could bolster US rate hike expectations.

There is a lot of Canada data including April GDP (forecast 0.2%), Industrial Product Price (forecast 0.3%) and Raw Materials Index (Forecast -1.0%)

The Bank of Canada’s Business Outlook Survey is also due. It is expected to paint an upbeat outlook on the economy.

Month end and quarter end portfolio rebalancing flow s may not be much of a factor as a couple of forecasts suggest only small US dollar selling.

Overnight Ranges

30-Jun-17 Open-6 am EDT High Low
USDCAD 1.2986 1.3010 1.2974
EURUSD 1.1409 1.1444 1.1393
USDJPY 111.94 112.14 1.12
GBPUSD 1.2991 1.3028 1.2977
USDCHF 0.9583 0.9592 0.9555
AUDUSD 0.7686 0.7710 0.7672
NZDUSD 0.7329 0.7333 0.7294
USDMXN 18.0425 18.1222 18.0182
WTI   45.27 45.39 44.91

 

USDCAD Technical outlook:

The intraday and short term USDCAD technicals are bearish.  They are looking for a break of support in the 1.2965 area to extend losses to 1.2770.  Arguable, a 0.0500 point drop in two weeks on mere “TALK” of a rate hike is a tad excessive, especially since there isn’t any chatter of additional hikes to follow.  USDCAD selling pressure may have been exacerbated by month end flows.  However, support in the 1.2965 area has contained downside moves since September 2016. For today, USDCAD support is at 1.2965 and 1.2940.  Resistance is at 1.3010 and 1.3050.

Today’s Range 1.2965-1.3050

Chart: USDCAD daily

usdcad-daily-chart

 

 

 

 

Further Reading

 

Disruptors Challenging Australian Banks in Forex Price and Service: ACCC Report

Key Takeaways from the ACCC inquiry into currency conversion services. BestExchangeRates referenced among comparison sites playing an important role in customer awareness of the excessive currency margins charged by banks.

Last update: 11 Dec, 2019

AUD/GBP Between a Rock and a Hard Place – USD Strength

AUD/GBP versus AUD/USD and GBP/USD

Both the Australian dollar and British pound sterling have had a hard time of late caught between the rock of the China/US trade war and the Brexit hard place.

Last update: 27 Aug, 2019

Australia Cuts Interest Rates to Record Low

RBA Australian dollar AUD currency news and forecasts

The RBA has cut Australian interest rates to a record low of 1 percent in an effort to boost inflation. The Australian dollar is slightly stronger following the widely expected decision but is expected to lose 5–7 percent of its value before year-end.

Last update: 14 Aug, 2019

  

Posted to: News

 
 
Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.
 

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