The US dollar started the week on softer footing, in part to an improvement in global risk sentiment. Global equity indices are higher, and US Treasury yields fell ahead of the first speech by Jerome Powell as Chair of the Federal Reserve, on Tuesday. Gold jumped 1.05%, rising from $1,326.88 to $1,340.85
EURUSD was bid from the outset and never looked back. Prices rose from 1.2281 to 1.2351 from the start of trading in Asia to the open in New York. Traders are awaiting a speech from ECB President Mario Draghi at 9:00 am ET today.
Sterling is supported on rate hike expectations. Bank of England Deputy Governor Dave Ramsden told the Sunday Times that he sees a case for faster rate hikes. GBPUSD climbed to 1.4068 from 1.3266.
USDJPY spiked higher at the Asai open, rising from 106.55to 107.27, It fell just as fast, finding a floor at 106.38 in early European trading, in part due to a drop in US Treasury yields.
AUDUSD and NZDUSD rallied in concert with the broad dollar weakness. AUDUSD got added support from firmer commodity prices.
WTI oil prices are steady at $63.58/barrel, underpinned by comments from Saudi Oil Minister Khalid al Falih who, on the weekend, said the Kingdom’s January-March production would be well below output caps.
USDCAD drifted lower due to the general US dollar weakness, but the move lacked the enthusiasm seen with the other FX majors. USDCAD is supported by concerns that Bank of Canada rate hikes will lag those of the Fed. Fears that the domestic economic growth is slowing and ongoing Nafta negotiation uncertainty are also limiting USDCAD downside moves.
FX trading may be on the quiet side today. The only data of note is US New Home Sales (forecast 3.2%). Traders may be content to sit on the fence until Tuesday’s Jerome Powell speech
USDCAD Technical outlook:
The intraday USDCAD technicals are bullish while prices are above 1.2615, looking for a break above 1.2670 to retest the 1.2715-50 resistance area. A break above 1.2760 targets 1.2915. A break below 1.2615 risks further 1.2450-1.2750 consolidation. For today, USDCAD support is at 1.2615 and 1.2570. Resistance is 1.2680 and 1.2720
Today’s Range 1.2620-1.2720