Overnight Range 1.2848-1.2942
NOTE: This chart represents gain (or loss) of G10 currencies vs. the US dollar from NY close-Jul 4 (4pm) to July 5 6: 00 am PST
Nervous FX markets tend to buy US dollars and the overnight session was nervous. Asia traders got spooked by Monday’s news that Standard Life Investments suspended trading in its UK commercial real-estate fund. It is Hotel California, UK style- “You can check-out any time you want, but you can never leave”.
The Japanese Yen became extremely attractive to a number of traders and USDJPY punched through minor support at 102.00. Traders may also be getting their nerve up to test the resolve of the bank of Japan, who many expect to intervene, if USDJPY gets below 1.0000.
The Reserve Bank of Australia left rates unchanged and in the monetary policy statement they didn’t appear to be too perturbed over the risks from Brexit, noting that several global economics have recorded improved conditions. As usual they gave a nod to the currency strength suggesting it could hamper domestic “economic adjustments”. AUDUSD jumped on the news but the gains didn’t last.
In Europe, Eurozone data including Services PMI and Retail Sales failed to spark any interest mainly because it was tabulated prior to the Brexit vote and in this new world order, is meaningless. The first of the UK Conservative party vote to replace PM Cameron is today. The Bank of England’s Financial Policy Committee reduced the capital requirements of UK banks which is expected to help them lend more to UK businesses. (or pay bonuses)
Oil prices were under pressure. WTI dropped steadily from yesterday’s closing level of $48,65 to a low of $47.45 so far. The rising US dollar gets the credit for the bulk of the move.
The Canadian dollar has gotten beaten up since New York walked in with yesterday’s rather down-beat BoC Business Outlook Survey not helping. Risk -off sentiment has dominated and the so-called, “dollar-bloc” currencies have faired poorly, led by GBPUSD.
USDCAD Technical outlook
The intraday USDCAD technicals are bullish while trading above 1.2850 supported by the move above 1.2890 overnight and looking for a test of the 5 day old, post Brexit downtrend line that comes into play in the 1.2920-40 area. A daily close above 1.2950 suggests further gains toward 1.3085. A break below the 1.2830-40 area is required to extend losses to 1.2700. For today, USDCAD support is at 1.2880 and 1.2850. Resistance is at 1.2950 and 1.2980 and 1.3010
Today’s Range 1.2870-1.2960