The US dollar closed on Thursday with modest gains against the G-10 major currencies. It added to those gains overnight and opened in New York on a strong note. Weak China data sent Asia stock markets tumbling which set the tone for Europe. All European bourses are in the red but off their worst levels. US equity futures point to a lower open on Wall Street.
A string of weaker than expected Eurozone Markit PMI reports knocked EURUSD from its perch at 1.1357 to 1.1287. German December Manufacturing PMI was 51.5, (forecast 52.0) France 49.7 (forecast 50.7) and Eurozone 51.4 (forecast 51.9) Yesterday’s ECB meeting was mostly “as expected” however ECB President Mario Draghi’s dovish bias served to cap EURUSD gains. If prices can’t break resistance at 1.1440, its time to test support at 1.1200. Germany’s Bundesbank cut its 2019 German growth forecast to 1.5% from 2.0%
GBPUSD’s post-Theresa May “no-confidence” rally stalled at 1.2685. Prices dropped from 1.2866 to 1.2569 after the British Prime Minister’s attempt to get the EU to improve the Brexit plan, failed.
JPY, AUD & NZD
USDJPY was rangebound in a 113.43-113.64 band. AUDUSD and NZDUSD weren’t. They plunged when the weak China data was released. NZDUSD selling was exacerbated by a press release from the Reserve Bank of New Zealand. The headline was read: “Reserve Bank proposes that bank owners bear greater share of financial system’s risks.”
USDCAD is mildly bid inside a 1.3340-1.3440 range. Prices are supported by the view that the Bank of Canada is dovish and by soft oil prices. The top side is capped by technical resistance and a loss of upward momentum. Traders are reluctant to get involved ahead of next week’s FOMC meeting and then the Christmas holidays.
US Retail Sales data is forecast at 0.2% m/m. It was 0.8% in October, mostly because of falling oil prices. Industrial Production is expected at 0.3%, up from 0.1% in October. The impact from this data should be fleeting as traders await next weeks FOMC meeting.
The intraday USDCAD tehnicals are bullish above 1.3350, looking for a break above 1.3405 to extend gains to 1.3440. Below 1.3350 targets 1.3320. Longer term, USDCAD is close to resistance at the top of the uptrend channel from October. Prices could retreat toward 1.3220 while maintaining the bullish bias. For today, USDCAD support is at 1.3360 and 1.3320. Resistance is 1.3405 and 1.3440. Today’s Range 1.3360-1.3440.