- FX trading subdued ahead of Jackson Hole meeting
- Oil prices higher on supply disruption fears from Gulf hurricanes
- US Durable Goods Order higher than expected
- US dollar opens on a mixed note, little changed from yesterday’s close.
FX Recap and outlook: The US dollar caught a small bid after July Durable Goods orders rose 9.7% compared to the 4.3% that was expected. News that the June results were revised higher was icing on the cake.
Narrow ranges and a lack of motivation to get involved succinctly describe FX markets overnight. Anticipation of a major policy announcement by Fed Chair Jerome Powell on Thursday at the Jackson Hole Symposium kept traders on the sidelines. It wasn’t much better elsewhere. The major equity indexes closed with losses, European bourses are marginally higher, and S&P futures are flat. Crude prices inched higher, Gold prices drifted lower, and US Treasury yields posted small gains. All the price action occurred within the confines of recent ranges.
Tensions in the Eastern Mediterranean Sea ratcheted higher when France joined military exercises with Italy, Greece, and Cyprus, in a show of force directed at Turkey. NATO VS NATO.
EURUSD traded lower in a narrow range falling from 1.1838-1.1773 on the back of comments from ECB Executive board member Isabel Schnabel and the better than expected US Durable Goods data. Ms Schnabel warned that there was more room to lower negative rates, which spooked traders. EURUSD has support at 1.1760 and 1.1700
GBPUSD drifted in a 1.3119-1.3164 range underpinned by sales of EURGBP but knocked off its peak level by the US data. Prices have a bullish bias while trading above 1.3060.
USDJPY, AUDUSD and NZDUSD traded quietly, alongside the other majors. New Zealand Trade data and Australia Construction work data were not factors.
Oil prices inched higher supported by the American Petroleum Institute report of another drop in US inventories, and of concerns about supply disruptions from Hurricane Laura, predicted to become a Category 4 storm.
USDCAD drifted lower alongside broad US dollar selling pressure and bearish short term technicals. Prices bounced back above 1.3200 following the Durable Goods report . Steady WTI oil prices above $43.00/ barrel, are also providing a modicum of support.
Bank of Canada Senior Deputy Governor Carolyn Wilkins headlines a BoC workshop on Monetary policy. Her speech is titled “Towards the 2021 Renewal of the Bank of Canada’s Monetary Policy Framework.”
USDCAD Technicals: The intraday USDCAD technicals are bearish below 1.3230, and still looking to crack support in the 1.3130 area. A move above 1.3240 targets 1.3320 and a break of 1.3320 suggests a short term bottom is in place. For today, USDCAD support is at 1.3150 and 1.3130. Resistance is at 1.3230 and 1.3250. Today’s Range 1.3150-1.3210
Chart: USDCAD 4 hour
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank