The US dollar opened with gains across the board thanks to renewed political concerns in Germany, comments from Japan’s Finance Minister and the risk of a US government shut-down on Friday.Despite all of that, the gains were not impressive.
USDJPY rallied from 110.44 to 110.96, supported by comments from the Finance Minister expressing “concern” about sharp moves in the currency. He also said he wasn’t concerned at current levels. USDJPY pared the gains and opened in New York at 110.70.
In Australia, strong New Motor Vehicle sales data was offset by general US dollar strength, and AUDUSD gave back initial gains..
NZDUSD dipped from 0.7305 to 0.7265 on profit-taking after posting decent gains last week.
EURUSD traded sideways in Asia and then dropped from 1.2282 to 1.2202 in Europe, undermined by news that the Berlin branch of the Social Democrats voted against forming a coalition with
Angela Merkel’s CDU/CSU parties. By itself, it is not a big deal, but it is evidence that the coalition negotiations are far from complete.
Sterling dropped in concert with EURUSD, falling from 1.3804 to 1.3743. Brexit worries are still front and centre. UK CPI was as expected.
The rise in the US dollar led to profit-taking in commodities. WTI oil declined to $63.95 from $64.73/b while Gold dropped to $1,333.33 from $1,342.13.
USDCAD is in “wait and see” mode ahead of the Bank of Canada policy meeting on Wednesday. The combination of strong economic growth, firm commodity prices and rising interest rates are capping top-side moves and keeping the focus on 1.2000.
The NY Empire State Manufacturing Index is the only data due today and it is usually a non-event. The focus will continue to be on German politics, US budget negotiations and equities.
USDCAD Technical outlook:
The USDCAD technicals are bearish while trading below 1.2550 looking for a break of minor support at 1.2405 to extend losses to 1.2350. Below 1.2350 targets 1.220 and the 1.1925-50 area. A move above 1.2550 would negate the downtrend and shift the focus to the 1.2750-1.2800 zone. For today, USDCAD support is at 1.2405 and 1.2380. Resistance is at 1.2450 and 1.2490
Today’s Range 1.2380-1.2460