Canada and US data largely as expected
European Indexes, and S&P 500 futures fall.
US dollar opens soft, and ending July with losses against G-10 currencies, except CAD and AUD
USDCAD open 1.2438-42, Overnight range, 1.2429-1.2471, Previous close 1.2446
FX at a Glance
FX Recap and outlook
Canada June GDP lived up to its advance billing, falling 0.3% m/m, the same as it did in May. US June Personal Income rose 0.1% m/m, beating the forecast of a 0.3% decline, Personal Spending rose 1.0%, and the employment cost index dipped to 0.7% from 0.9%. The results were a non-vent for FX.
Overnight global equity markets suffered, in part because of Amazon’s Q2 earnings miss, while month-end portfolio rebalancing flows and Eurozone data undermined the US dollar overnight.
Japan’s Nikkei 225 index, lost 1.80%, leading Asia equities to a negative close. The major European indexes are in the red, as are DJIA, and S&P 500 futures, which are down 0.27%, and 0.56% as of 8:45 am ET. WTI oil prices are unchanged from the close while gold is retreated from its overnight peak of $1831.20.
The US dollar is ending July on a weak note. The traditional safe-haven currencies, JPY, and CHF are the biggest winners in July, while AUD is the biggest loser. CAD is back to where it started the month.
EURUSD had a peak above 1.1900, after Eurozone GDP rose 2.0% q/q, beating the forecast of a 1.5% q/q increase, despite issues from the coronavirus delta strain. However, weaker than expected German GDP data (actual 1.5% q/q vs forecast 2.0% q/q) took the bloom off the rose. July CPI topped the ECB target, rising to 2.2% y/y (forecast 2.0%y/y), while unemployment fell to 7.6% from 7.8%. EURUSD needs to break above 1.1910 or risk a drop to 1.1800.
GBPUSD continues to bask in the glow from a full reopening of the economy, and manageable delta-variant COVID-19 risks, combined with upgraded GDP forecasts from the IMF. Prices are also underpinned by expectations the Bank of England will raise its forecasts, supporting speculation of a May 2022 rate hike. The GBPUSD technicals are bullish above 1.2850 and gaining additional support with a break above the 100 day moving average at 1.3921.
USDJPY traded in a 109.37-109.62 range. The currency pair suffers from low US Treasury yields and additional coronavirus measures extending restrictions in Tokyo and Osaka until the end of August. Japan’s unemployment rate slipped to 2.9% from 3.0%, while Industrial Production rose 6.2%.
AUDUSD traded in a 0.7377-0.7403 band overnight and is at the bottom of that range in NY. The currency is also on the defensive as traders downgrade expectations that the RBA begins tapering.
USDCAD dropped from 1.2471 to 1.2428, which is where it is trading in NY. USDCAD selling stems from month-end portfolio rebalancing flows, firming oil, and other commodity prices, as well as broad US dollar weakness.
Note: There will not be an update on Monday August 2. It’s a Canadian holiday.
USDCAD technical outlook
The intraday USDCAD technicals are bearish while trading below 1.2530, looking for a test of the 100-day moving average at 1.2365. For today, USDCAD support is at 1.2420 and 1.2380. Resistance is at 1.2470 and 1.2510. Today’s range 1.2390-1.2470
Chart USDCAD daily
Source: Saxo Bank
FX open, high, low, previous close
Source: Saxo Bank