The US dollar opened in New York on a mixed note. The commodity currency bloc had small losses compared to yesterday’s gains while the rest of the G10 major were in positive territory. The move was merely consolidation inside dominant trends. The Federal Open Market Committee minutes are partially to blame
The FOMC) minutes disappointed those looking for evidence of a “hawkish” bias to the interest rate outlook. The Committee noted that inflation could “overshoot the 2% target, for a time” which doesn’t imply a faster pace of rate hikes. The minutes were cautious. “A number of Districts, contacts, expressed concern about the possible adverse effects of tariffs and trade restrictions, including the potential for postponing or pulling back on capital spending.”
USDJPY dropped following the minutes and touched 109.34 in Asia. Lower Treasury yields exacerbated the drop.Prices rebounded in Europe and opened at 109.69 in New York.
NZDUSD popped when New Zealand reported a larger than expected Trade surplus for April. The trade surplus widened to $263 million, but a revision offset that good news to the March data which recorded a bigger deficit. NZDUSD traded in a 0.6905-0.6936 range and is trading in New York at 0.6918. AUDUSD tracked Kiwi moves and is trading in the middle of its 0.7544-73 range.
EURUSD traded sideways in Asia and popped in Europe, supported by comments by ECB Chief Economist Peter Praet. He said that the economic conditions are good but acknowledged there were ‘clouds”, one of which was Italy’s new governments plan to loosen fiscal policy. EURUSD opened at 1.1728, in the top part of its 1.1691-1.1745 overnight range.
Better-than-expected UK April Retail Sales (Actual 1.6%, m/m vs forecast 0.7,m/m) gave Sterling a lift. GBPUSD popped to 1.3420 from 1.3350. The rally faded quickly, and prices opened in New York at 1.3392.
WTI oil prices have steadily since Tuesday, undermined by a jump in US crude inventories and talk that Saudi Arabia would increase production to limit price shocks from the loss of Iran and Venezuelan oil production.
USDCAD was mostly ignored, and traders were content to track EURUSD moves.There is any domestic data on tap today or tomorrow leaving the currency exposed to NAFTA headlines and commodity prices.
USDCAD Technical Outlook
The intraday USDCAD technicals are bullish while prices are above 1.2830, looking for a test of 1.2920. A move below 1.2830 would extend losses to 1.2800 and then 1.2750. The 1.2720-1.2920 range, since May 9, remains intact and without any domestic data in the near term, should stay that way.
Today’s Range 1.2805-1.2905
