Equities are lower amid nervous sentiment
Elon chats and bitcoin churns
US dollar opens with losses except against AUD and NZD
FX at a Glance
FX Recap and Outlook
Traders were skittish to start the week. Chinese Retail Sales numbers were below forecast, with COVID-19 playing a role, while Industrial Production was as expected. The news lifted China Equity indexes. Japan’s Nikkei 225 closed lower due to domestic coronavirus issues. Australia’s ASX200 ticked higher. European bourses and S&P 500 futures are in the red, and 10-year US Treasury yields are unchanged at 1.623%. Gold and oil prices are higher.
Last week, Elon Musk hosted Saturday Night Live. This weekend he was the star of the Bitcoin Follies. Musk replied “indeed” in a tweet that Tesla may unload its Bitcoin holdings. BTCUSD dropped from 49,814.01 to 42,212.56, then recovered to $45,013.86 when Elon tweeted: “To clarify speculation, Tesla has not sold any Bitcoin.”
EURUSD is consolidating in the middle of its overnight 1.2127-1.2168 range, while maintaining an upward bias above 1.2080. The 10-year US Treasury yield retreat from its post-US CPI peak to 1.62% today is providing some support to prices. The single currency is also underpinned by the improved vaccine roll-out in the eurozone and easing COVID-19 restrictions in Italy and Spain.
GBPUSD trades with a bullish bias with the uptrend from the beginning of the month intact above 1.4040. A break above 1.4150 today suggests further gains to 1.4200, then 1.4250. GBPUSD is underpinned by anticipation of the economy fully reopening in June. Trading may be subdued ahead of Tuesday’s employment report.
USDJPY is trading at the bottom of its overnight 109.09-109.49 range due to softer US Treasury yields and concerns about expanded COVID-19 measures in major urban areas. Japan’s Producer Price Index rose 0.7% m/m in April compared to 0.6% m/m in March.
AUDUSD and NZDUSD were weighed down by Chinese Retail Sales and Industrial Production data, with the results suggesting the economic recovery was slowing.
USDCAD continues to consolidate losses after breaking below 1.2250 two weeks ago. WTI oil prices are below their recent peak. The latest Chinese economic data and reports Iran may be able to return to pre-sanction crude production levels within three months limit oil gains and are helping to reinforce the USDCAD floor at 1.2050. Canadian Housing starts were a tad softer in April, falling to 268,600 from 334.800, but that was all due to new coronavirus lockdown measures. Traders are looking ahead to Wednesday’s inflation numbers.
The Empire Manufacturing Index was 24.2, better than expected but below the April result.
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish below 1.2160, looking for a break of support at 1.2050 to target 1.1970. A break above 1.2160 targets 1.2250. For today, USDCAD support is at 1.2080 and 1.2050. Resistance is at 1.2140 and 1.2170.. Today’s Range 1.2080-1.2130
Chart: USDCAD 4 hour
Source: Saxo Bank
FX open, high, low, previous close
Source: Saxo Bank