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- New record peaks for Wall Street expected
- US dollar steady ahead of Powell speech Thursday
FX at a Glance:
USDCAD Snapshot Open 1.2633-37, Overnight Range 1.2615-1.2656, Previous close 1.2648
USDCAD drifted lower in a quiet overnight session, taking its directional cues from broad US dollar moves. There were not any major economic reports or geopolitical events to cause distraction, leaving modestly positive risk sentiment, and firming oil prices to undermine the currency pair. USDCAD continues to be pressured as WTI oil prices claw back last week’s losses. Broad US dollar weakness and a rebound in positive risk sentiment is driving the move.
Technical view: The intraday USDCAD technicals are bearish below 1.2690, looking for a breach of 1.2590 to extend losses to the 1.2540 area. A break above 1.2690 puts 1.2800 in play. Longer term, the USDCAD outlook is bullish above 1.2540. The break above 1.2650 last Wednesday, and rally to 1.2944 suggests USDCAD entered into a new 1.2540-1.2950 range. For today, USDCAD support is at 1.2610 and 1.2570. Resistance is at 1.2670 and 1.2710. Today’s range 1.2610-1.2670
Chart USDCAD daily, 8 months
Source: Saxo Bank
G-10 FX recap and outlook
It’s a slow news day. The US dollar continued to consolidate recent losses in an uneventful overnight session. Traders are awaiting Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium. There is plenty of speculation that Mr Powell, may use the opportunity to provide clarity about the Fed’s tapering plans. However, many analysts think the speech will be a “non-event,” as rising delta-variant COVID-19 cases in the US support Mr Powell’s view that the recovery is fragile, and it is not the right time to reduce stimulus.
Bitcoin (BTCUSD) is getting attention has it hovers around the psychologically important $50,000 level. The cryptocurrency rallied in part, due to speculation the Fed would be forced to delay tapering, and because PayPal said its UK platform would soon be able to buy and sell cryptocurrencies.
EURUSD traded with a modest bid in a 1.1728-1.1748 range, with prices getting a bit of a boost from better-than-expected German GDP data, and improved risk sentiment. However, the downtrend from the beginning of June is intact while prices are below 1.1810.,
GBPUSD bounced inside a 1.3695-1.3747 range with prices supported by broad US dollar weakness. There isn’t much in the way of UK economic data this week leaving traders sidelined until Powell’s speech. The intraday technicals are bullish above 1.3700, but gains are merely corrective while the downtrend line from June is intact (1.3860).
USDJPY chopped around in a 109.65-109.87, with price movements tracking US 10-year Treasury yields which bounced between 1.25% and 1.28%. Traders ignored reports that the government is considering expanding the COVID State of Emergency.
AUDUSD and NZDUSD rallied with the improved risk tone. AUDUSD climbed to 0.7246 from 0.7243, which is just a correction inside the downtrend channel that has been in place since June. NZDUSD got a helping hand from better-than-expected Retail Sales data (actual 3.3% q/q vs forecast 2.0%) and rallied to 0.6947 from 0.6881.
US July New Home Sales are on tap.
Chart of the Day- Bitcoin (BTCUSD)
FX open, high, low, previous close
Source: Saxo Bank
Today’s Bank of China Fix, 6.4805 Previous day 6.4969
Shanghai Shenzhen CSI 300 rose 1.09% to 4888.39
ING downgrades 2021 growth to 8.9% y/y (previous 0.2% y/y in July. Blames chip shortage and COVID for the move.
ING forecasts USDCNY 6.47 by year end (previous 6.45) due to weaker growth and divergent monetary policy with US
Chart: USDCNY 1 month
Source: Yahoo Finance