The Canadian dollar squeezed out added gains today on IMF forecasts, domestic data, and oil. May Wholesale Sales data improved. The forecast was for a gain of 0.5 percent, a tad lower than the April 1.0 percent rise. However, today’s 0.9 % increase more than offset the revision to the April data (0.8% vs. previous 1.0%) and USDCAD dipped to 1.2510 from 1.2530.
The Canadian dollar is also supported by news that the IMF World Economic Outlook raised their forecast for Canada GDP growth to 2.5 percent from 1.9 percent in April. That upgrade contrasts with the US forecast for GDP growth of 2.1 percent, down from the 2.3 percent predicted in April.
Oil prices rose after news from the Opec meeting. Optimistic comments coming from Saudi Arabia’s Energy Minister Khalid al-Falih gave prices a boost. He said that rising oil demand would more than offset increases from US shale production. He added that Opec and its Non Opec partners are ready to take additional measures if warranted. WTI rallied from $45.42/b to $46.31 and has since settled in at $46.10/barrel.
Asia FX markets were slow to get going. AUDUSD traded sideways and then rallied in Europe climbing to 0.7966 from 0.790. Price movements may be contained until Wednesday’s inflation report and a speech by RBA Governor Phillip Lowe. NZDUSD trading was very dull still managed to squeeze higher on broad US dollar weakness.
USDJPY opened at the session high of 111.18 and was trading at 110.70 at the New York open. The Markit PMI data was a tad lower than forecast (Actual 52.2 vs. forecast 52.4). A bout of risk aversion due to sabre rattling between China and India didn’t help. Nor did the latest IMF World Economic Outlook which lowered the US growth forecast to 2.1% from 2.3%.
EURUSD traded sideways in Asia and eased, slightly, in Europe, dropping to 1.1631 from a peak of 1.1683. Weaker than expected Eurozone PMI data and the pending FOMC meeting contributed to the selling pressure.
Weaker than expected US PMI and Exiting Home Sales data released today will only reinforce speculation that the Fed is on hold for the rest of the year. Strong data will be ignored as it won’t be seen to have any impact on this week’s statement only meeting.
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish. Prices are in the middle of a gently sloping 1.2480-1.2580 downtrend channel. Longer term, the downtrend stays intact while prices are below 1.2860. A break below 1.2465 sets the stage for added losses to 1.2050. For today, USDCAD support is at 1.2510 and 1.2480. Resistance is at 1.2560 and 1.2580.
Today’s Range 1.2480-1.2540