Photo: Pixabay

August 25, 2021

German IFO data miss forecasts

US July Durable Goods Orders a tad better than expected

US dollar opens slightly lower from yesterday; safe-haven currencies weaker.

FX at a Glance:

Source: IFXA/RP

USDCAD Snapshot   Open 1.2601-05, Overnight Range 1.2588-1.2625, Previous close 1.2589

USDCAD consolidated recent losses as traders await speeches from the Jackson Hole Symposium, starting with Fed Chair Powell Friday at 7:00 am PT.  There is a ton of speculation that Powell’s speech will reveal the Fed’s tapering plans, despite the latest COVID-19 delta variant numbers supporting Mr Powell’s cautious, wait and see approach.  USDCAD is also undermined by the rebound in WTI oil prices which have climbed to $67.33/barrel from $67.65 from $61.92 Monday.  Today’s US Durable Goods Orders will not be a factor for FX.

Technical view:  The intraday USDCAD technicals are bearish below 1.2630, looking for a breach of 1.2580to extend losses to the 1.2540 area. A break above 1.2630 targets 1.2680.  Longer term, the USDCAD uptrend from June 14 is intact above 1.2540. For today, USDCAD support is at 1.2580 and 1.2540. Resistance is at 1.2630 and 1.2680. Today’s range 1.2590-1.2630

Chart USDCAD 4 hour

Source: Saxo Bank

G-10 FX recap and outlook

It’s just another wasted day in FX land.  The looming Jackson Hole Symposium is all the excuse traders need to hit the golf course or their favourite watering hole. 

Traders largely ignored news the US House of Representatives passed the $3.5 trillion budget plan.  The major Asian equity indexes closed mixed.

Australia’s ASX 200 closed a tad higher, the Nikkei 225 finished flat, and the Hang Seng dipped.   European bourses are trading in positive territory, except for the Dax, which is down 0.17%.  Gold drifted lower, oil inched higher, and the US 10-year Treasury yield is 1.307%.

The July US Durable Goods Orders report was slightly better than expected.  New Orders fell 0.1% compared to the consensus forecast for a 0.3% drop.  Traders just yawned with the news.

EURUSD bounced in a 1.1734-1.1759 range, dropping from peak to trough in Asia and early Europe, then rebounding to the top after the release of the German IFO data.  Prices have inched lower since. The Business Climate Index fell to 99.4 from 100.7, Expectations slipped to 97.5 from 101, while the current Assessment rose to 101.4 from 100.4.  ING economists said the results bode well for Q3 growth.  The intraday EURUSD technicals are bearish below 1.1770.

GBPUSD is stuck in a 1.3695-1.3745 range.  Traders are waiting for Jackson Hole speeches to provide direction. The slightly weaker-than-expected retail sales and PMI data have taken the pressure off the Bank of England to raise interest rates, and that is weighing on the currency.  A break above 1.3780 targets 1.4000, while a move below 1.3590 risks a drop to 1.3500.

USDJPY rallied from 109.66 to 109.86 on the back of higher US Treasury yields and the unwinding of safe-haven trades.  The USDJPY uptrend channel from April is intact while prices are above 109.15.

AUDUSD and NZDUSD opened close to where they closed in NY yesterday. NZDUSD is getting additional support from somewhat hawkish comments by RBNZ officials suggesting the rate hike agenda has not changed.

Chart of the Day- CBOE Volatility Index

Source:  Yahoo Finance

FX open, high, low, previous close

Source: Saxo Bank

China Snapshot

Today’s Bank of China Fix, 6.4728 Previous day 6.4805                            

Shanghai Shenzhen CSI 300 rose 0.20% to 4898.16

Chart: USDCNY 1 month

Source: Yahoo Finance