The US dollar started the New York sessions with modest gains compared to Friday’s close. That wasn’t the case in Asia where several markets were closed for holidays.
USDJPY inched higher to start the day and then accelerated in Europe, rising from a low of 111.15 to 111.70. A rise in Asia equity indices an US Treasury yields encouraged the move.
The antipodean currencies were subdued. AUDUSD traded in a tight 0.7562-0.7588 range while NZDUSD drifted inside a 0.9628-0.9662 range. Aussie and Kiwi opened in New York virtually unchanged from Friday’s close.
EURUSD languished in Asia but roared to life in Europe.
Stronger than expected German IFO data (Expectations 106.8 vs. forecast 1064, Business climate-115.1 vs. forecast 114.4 and Current Assessment-124.1 vs forecast 123.3) lifted EURUSD from 1.1184 to 1.1206.
Traders were still feeling good about the IFO data when news that Italy’s centre right parties made substantial gains in mayoral elections which may raise the stakes in next year’s elections. EURUSD tumbled down to 1.1177 on the news.
The Eurozone PMI report was similar. A gain in Manufacturing PMI (Actual 57.3) was offset by misses in Services and composite data. Still, the data was mostly EURUSD positive. However, the spike from 1.1160 to 1.1185 was brief and reversed quickly.
Sterling drifted higher in Asia on anticipation that Theresa May will announce a deal with DUP party to allow her to form a government. GBPUSD peaked at 1.2757 and then dropped to 1.2707 on the Italian election story.
Oil prices drifted higher in quiet trading, rising from $43.16 to $43.63/b. Gains were tempered by news that the oil-rig count had risen for the 23-consecutive week.
USDCAD rallied on Friday, rising from 1.3218 to 1.3305 on weaker than expected CPI data. That move was revered just as quickly. The currency pair spend the overnight session trapped in a narrow 1.3241-1.3276 band and it opened in New York at the lows.
FX markets trade with a degree of caution overnight as traders awaited this morning’s US Durable Goods data. The forecast is for a decline of 0.6% in May which follows an 0.8% decline in April. The risk is that the data will be better than expected, leading to a USD rally.
The June 12 Bank of Canada policy shift from doveishly neutral to hawkish lifted pegged the chance of a July rate hike at 33%. Friday’s soft inflation data didn’t do much harm to those odds. That’s because the BoC should have already be aware of the inflation data. If they aren’t concerned, why should traders be?
The IMM Commitment of Traders report notes that although short CAD positions declined, the position is still large, which should help to cap topside gains. On the other hand, soft oil prices will slow USDCAD losses If so, the 1.3160 1.3350 range should remain intact this week.
|26-Jun-17||Open-6 am EDT||High||Low|
USDCAD Technical outlook:
The technical picture hasn’t changed from Friday. The intraday USDCAD technicals are mildly bearish below 1.3290 inside the 1.3165-1.3350 consolidation range. The downtrend line from May 5 stays intact while prices are under 1.3430. For today, a break of 1.3210 will lead back to 1.3165. If 1.3165 is broken, it will hang a target on 1.3010 and then 1.2965. A break above 1.3320 would lead to a test of 1.3420.
Today’s Range 1.3190-1.3280
Chart: USDCAD 30 minute.
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