Source: Pixabay

July 12, 2021

USDCAD open 1.2491-95, Overnight range, 1.2449-1.2513,  Previous close 1.2445

FX at a Glance

FX Recap and outlook

It is a cautious start to a busy week. The Bank of Canada and Reserve Bank of New Zealand monetary policy meetings and Fed Chair Jerome Powell’s quarterly Congressional testimony are Wednesday. The US and China feud is heating up.  The American’s black-listed 14 Chinese companies and sent a Navy ship cruising contested waters in the south China Sea. China said the US actions are a serious breach of international economic and trade rules.

Wall Street Q2 earnings season begins, with S&P 500 futures trading slightly below Friday’s record close. Oil prices slumped 1.3%, and gold prices are 0.47% lower. US 10-year Treasury yields are steady at 1.34%.

The US dollar opened firmer in NY on Monday, clawing back some of Friday’s losses after risk sentiment turned cautious.

EURUSD is traded choppily in a 1.1850-1.1879 range, falling from the peak to trough into the NY open.  The failure to extend gains above 1.1880 is modestly bearish and keeps the focus on support at 1.1780.  A break above 1.1880 targets 1.1970.  Traders are cautious ahead of reports ECB President Christine Lagarde’s policy change announcement next week will be dovish. .

GBPUSD dropped from 1.3909 in Asia to 1.3849 in early NY trading.  Prices remain of the defensive following last week’s data suggest the pace of UK growth is slowing.  Traders are also concerned about rising COVID-19 cases even as the economy reopens.

USDJPY traded in a 109.97-110.27 band.  Prices inched lower alongside sliding US 10-year Treasury yields, which dipped to 1.338% from 1.356%.

AUDUSD and NZDUSD tracked broad US dollar sentiment.  The RBNZ is expected to release and optimistic monetary policy statement as the domestic economy is better than the RBNZ expected.  Many Bank economists are predicting a rate hike in November. ASB economists ask “why wait?”

USDCAD continues to consolidate in a 1.2450-1.2600 range after a top-side break failed at 1.2590, last week. USDCAD direction is correlated with WTI oil and S&P 500 moves.  The Bank of Canada policy meeting and Monetary Policy Report are on  Wednesday, which may undermine USDCAD.

The US and Canadian economic calendars are empty.

USDCAD technical outlook

The USDCAD technicals are bullish above 1.2450, looking for a break above 1.2530 to target 1.2600.  A move below 1.2440 targets 1.2370.   For today, USDCAD support is at 1.2450 and 1.2410. Resistance is at 1.2520 and 1.2550   Today’s range 1.2460-1.2530

Chart USDCAD 4 hour

Source: Saxo Bank

FX open, high, low, previous close

Source: Saxo Bank