FX markets got off to a perky start in Asia.President Xi Jinping added his voice to the chorus of senior Chinese officials “verbally intervening” in markets, promising more stimulus, including tax cuts. Chinese equity market indices soared, which underpinned AUDUSD and NZDUSD. The rally didn’t last. Prices faded in Europe and the greenback opened in New York with gains against the major G-10 currencies except for the Canadian dollar.
USDJPY rallied in concert with rising US Treasury yields. 10-year Treasury yields climbed from 3.185% to 3.207% before dropping back to 3.194 in New York. USDJPY continues to trade at the top of its overnight 112.36-112.86 range.
In Europe, EURUSD retreated from its 1.1550 peak and is currently trading at 1.1495. Moody’s mildly downgraded Italy long-term debt to Baaa3, which is the bottom of the barrel for Investment grade.
GBPUSD dropped from 1.3088 in Europe to 1.3022 in New York after a rash of negative Brexit headlines on the weekend. Prime Minister Theresa May could face a leadership challenge this week which, if she lost, would raise the risk of a “no-deal” Brexit.
Oil prices are bid despite a rise in US rig counts reported at Fridays close.Traders are concerned about the US reaction to Saudi Arabia’s explanation of the missing journalist. They are weaving a tale about a man who dies after walking into the Saudi Embassy, picking a fight with a 15 man “hit-team” and then perhaps jumping into a meat grinder to facilitate his escape. There isn’t any US or Canada data of note today, leaving oil and equity prices to drive direction..
The intraday USDCAD technicals are bearish after failing to break above the downtrend line from June on Friday. The intraday technicals are bearish below 1.3110 looking for a break of support at 1.3070 to target 1.3020 and then 1.2950.
Today’s Range 1.3040-1.3110