EURUSD was snapped out of its complacent range trading drift just as the New York session was getting started. A Bloomberg report citing “sources” said that the European Central Bank would pare back the inflation forecasts through to 2019, at Thursday’s meeting. The new forecasts predict inflation to grow at 1.5% in 2017 to 2019, down from 1.7%, 1.6% and 1.7%, respectively.
EURUSD plunged from 1.1275 to 1.1205 but has since bounced.
Sterling in election mode. GBPUSD has remained in a tight 1.2989-1.2921 range and vulnerable to weakness on a “hung parliament”. The OECD warned (again) that UK growth will slow due to Brexit. It was ignored.
In Asia, Australia’s Q1 growth was a better than expected 1.7%, year over year. That data followed a fairly positive RBA economic assessment. AUDUSD rallied from 0.7501-to 0.7565, making it the best performing currency overnight.
Kiwi tracked Aussie higher but not with the same enthusiasm. Yesterday’s GlobalDairyTrade auction results were viewed favorably and NZDUSD rose from 0.7171 to 0.7203
USDJPY rose in Asia, fell in Europe, and then rebounded in New York trading. Yen traders are pulled be risk aversion fears stemming from the Comey testimony and the UK election and the chance for higher US interest rates.
Oil prices were steady inside a $47.79-$48.20/b range. Yesterday, API Crude Stocks change showed another drop in US inventories. However, fresh concerns about Middle East events overshadowed the news.
USDCAD appears reluctant to take part in the broad US dollar weakness. The proximity of major support in the 1.3390-1.3400, the pending NAFTA renegotiation, and soft oil prices are limiting USDCAD losses.
For the rest of the day, FX traders will likely stay sidelined awaiting tomorrow’s three-ring circus (UK election, ECB, and Comey Testimony)
USDCAD Technical outlook:
The USDCAD technicals are bearish. The uptrend line from April appears to be breaking with the move to 1.3429. The intraday technicals are bearish while prices are below 1.3470 with a decisive break below 1.3440 targeting 1.3359. For today, USDCAD support is at 1.3430, 1.3400 and 1.3380. Resistance is at 1.3475 and 1.3510
Today’s Range 1.3410-70
Chart: USDCAD 4 hour
Source: Saxo Bank
The Mexican peso has had an enjoyable time since the middle of May. Banxico hiked interest rates by 0.25 bps on May 18 which started the USDMXN slide. The Institutional Revolutionary Party (PRI), the ruling party in Mexico, emerged victorious in a state election on the weekend which worsened the USDMXN slide. And President Trump’s political woes have been the icing on the cake and to paraphrase Pink Floyd, removed another brick in the wall.
USDMXN is in a downtrend while prices are below 18.6500 and are looking for a break of support at 17.8900 to extend losses to 17.0400. A break above 18.6500 would retarget 19.4000
Chart USDMXN 4 hours
Source: Saxo Bank