Photo: HazemSaleh from Pixabay
South Korea hikes interest rates 0.25%, currency sinks
US Q2 GDP 6.7% y/y, weekly Jobless Claims 353,000
US dollar inches higher overnight, opens mixed in NY compared to Thursday open
FX at a Glance:
Source: IFXA/RP
USDCAD Snapshot Open 1.2602-06, Overnight Range 1.2588-1.2625, Previous close 1.2588
USDCAD is starting today’s session exactly how it started yesterday. It’s Groundhog Day in August, without Bill Murray.
The hype around Fed Chair Jerome Powell’s speech has traders hog-tied and currencies rangebound. USDCAD isn’t any different. The currency pair inched down from its overnight peak despite WTI prices trading lower.
The Canadian election is making for some nice headlines, but traders do not seem to care. Taxing bank profits over $1.0 billion has a nice ring to it, as “tax the rich” has become trite. Traders are also ignoring Liberal plans to tax the capital gains from the sale of your house. They say the tax is just for people flipping houses, but did not specify the duration of a flip, which could be weeks or even decades.
USDCAD direction will track Wall Street moves.
Technical view: The intraday USDCAD technicals are neutral inside a 1.2585-1.2685 range. A move below 1.2580 will extend losses to 1.2540 then 1.2500. A break above 1.2690 targets 1.2800. For today, USDCAD support is at 1.2580 and 1.2560. Resistance is 1.2640 and 1.2680. Today’s range 1.2580-1.2640
Chart USDCAD hourly, one month
Source: Saxo Bank
G-10 FX recap and outlook
There isn’t much going on in the world of FX, or any other asset class for that matter. Jerome Powell’s Jackson speech tomorrow has sidelined traders all week and will continue to do so today.
The highlight of the overnight session was the Bank of Korea’s surprise 0.25% interest rate hike, taking rates to 0.75%. The Bank governor warned of further hikes as fears of rising inflation outweigh COVID-19 concerns.. Oddly, USDKRW rallied on the news.
US Q2 GDP rose 6.7%, a tad lighter than the 6.7% forecast, but a tick higher than the 6.6% “advance” estimate released in July. Weekly jobless claims rose 353,000, which was too close to the 350,000 forecast to create a stir.
EURUSD is at the top of its 1.1758-1.1778 range, with the break above 1.1755 snapping the two-week downtrend. Prices have garnered a little support from somewhat upbeat comments by Luis de Guindos yesterday, suggesting the ECB may upgrade growth forecasts.
GBPUSD slid steadily, falling from 1.3767 to 1.3733, due to the failure to break resistance in the 1.3770-80 zone and EURGBP demand. Sentiment is modestly bearish as last week’s data reduced pressure on the Bank of England to raise interest rates. GBPUSD technicals are negative below 1.3780.
USDJPY caught a bid when Europe opened and rallied from 109.91 to 110.22, extending gains made since Tuesday when USDJPY sat at 109.40. The rally mirrored US 10-year Treasury yields, which jumped from 1.233% Tuesday to 1.347% today.
AUDUSD and NZDUSD failed to extend yesterday’s gains and drifted lower inside a narrow band.
AUDUSD topside gains were also hampered by news COVID-19 lockdown measures in New South Wales would be extended until September 10 due to a new daily record of COVID-19 cases
Chart of the Day- Korean Won USDKRW
Source: Yahoo Finance
FX open, high, low, previous close
Source: Saxo Bank
China Snapshot
Today’s Bank of China Fix, 6.4730 Previous day 6.4728
Shanghai Shenzhen CSI 300 fell 1.97% to 4801.61
Ongoing regulatory concerns weigh on stocks. MIIT removed 57 apps from stores over privacy concerns.
Chart: USDCNY 1 month
Source: Yahoo Finance
