The US dollar started the New York session on a mixed note. It has posted minor losses against the commodity currency bloc, Swiss and yen while eking out tiny gains against Sterling and the euro. The overnight activity is viewed as just a ‘sped bump” before renewed US dollar strength.
US Treasury yields continue to be the “flavour de jour”, and their steady gains has lit a fire under US dollar bulls.The Greenback peaked yesterday when 10-year Treasury yields touched 3.095%. They are currently at 3.063%,.
EURUSD topped out at 1.1852 in Asian and dropped steadily in Europe, touching 1.1795 in early New York trading. Italian politicians are discussing asking the ECB for a 250 billion write off, which doesn’t help sentiment. Eurozone April CPI was a soft, 1.2%, as expected.
GBPUSD traded sideways in Asia and then dropped from 1.3519 to 1.3467 in early New York trading. Prices are weighed down by US dollar demand. The UK is still struggling with the post-Brexit customs arrangements which keep fears of a hard Brexit alive. The higher US rates and a dovish Bank of England outlook are also weighing on the currency pair
USDJPY consolidated yesterday’s gains above 110.00 and traded in a 110.08-110.37 range. With prices supported by higher US rates. Japan recorded weaker than expected Q1 GDP results. (Actual -0.6%, y/y vs forecast 0.0%, y/y)
AUDUSD enjoyed a bout of profit-taking and rallied from 0.7448 to 0.7492. Prices got a little support from Wage Price Index data and Westpac Consumer Confidence which was “as expected.”
USDCAD chopped around in a tight range. Demand from broad US dollar strength was marginally tempered by elevated oil prices. The risk that the NAFTA negotiations fail, or at least miss the May 17, US Congress deadline is also underpinning prices.
Canada Manufacturing Shipments for March are due this morning expected to drop to 1.2% from 1.9% in February. US data includes Housing Starts, Building Permits, Industrial Production and Capacity Utilization. The economic reports will take a back seat to US Treasury yields, Wall Street and North Korea/US summit developments.
USDCAD Technical Outlook
The intraday USDCAD technicals are bullish while prices are above 1.2805 looking for a break above 1.2870 to lead to 1.2910. A move thjrough 1.2910 targets 1.2980 and then 1.3030. For today, USDCAD support is at 1.2840 and 1.2805 Resistance is at 1.2870 and 1.2930
Today’s Range 1.2830-1.2930