Photo: Pixabay Florian Pircher
Oil prices steady even after Opec bumps production by 400,000 b/d
Weekly Jobless claims 340,000 (forecast 345,000)
US dollar on defensive as soft ADP data suggests same for NFP
FX at a Glance:
USDCAD Snapshot Open 1.2600-04, Overnight Range 1.2589-1.2637, Previous close 1.2619
USDCAD’s overnight range was nearly identical to Wednesday’s as price action mirror the prevailing US dollar sentiment. Yesterday’s sharply weaker than expected ADP employment report (actual 374k vs forecast 613k) had traders downgrading their expectations for the upcoming Nonfarm payrolls data. Soft NFP suggests the Fed will be in no hurry to either taper or raise rates.
WTI oil prices continued to consolidate earlier gains in a $68.00-$70.00/b range. The 400,000 b/d increase in Opec oil production, and concerns about slowing China growth are capping gains.
The modestly better US weekly jobless claims report and the weaker than expected Canadian Merchandise trade data combined to underpin USDCAD.
The weaker than expected Canada GDP report on Tuesday, and a lack of upside in WTI prices suggests USDCAD downside is limited.
Technical view: The intraday USDCAD technicals are rangebound. The intraday downtrend following the drop below 1.2750 on August 23 is 1.2630 and converging on the June uptrend line at 1.2560. A move either side will determine the next 0.0100 points. A topside break targets 1.2760, while a downside move will test 1.2480. For today, support is at 1.2580 and 1.2560. Resistance is 1.2630 and 1.2670. Today’s range 1.2580-1.2630
Chart USDCAD daily- 6 months
Source: Saxo Bank
G-10 FX recap and outlook
US weekly jobless claims fell 14,000 in the week ending August 27, and the four-week moving average fell to355,000 from 366,750 previously. The US dollar drifted higher following the news.
The overnight FX action was like a country and western dance; a lot of to-ing and fro-ing but going nowhere.
Asia equity indexes closed on a mixed note. Japan’s Nikkei 225 and Hong Kong’s Hang Seng indexes posted modest gains, China’s Shanghai Shenzhen CS! 300 was flat, and Australia’s ASX200 fell 0.55%. European bourses are close to unchanged, and S&P 500 futures are up 0.19%. WTI oil prices are steady at $68.88/b, and gold gained 0.10%. US 10-year Treasury yields ticked down to 1.289% (as of 6:45 am ET).
Trading may be quieter than usual today due to the remnants of Hurricane Ida forcing authorities in NY and New Jersey to declare a State of Emergency.
EURUSD traded in a 1.1835-1.1854 range with prices supported by downgraded expectations for Friday’s NFP report following the ADP data. Eurozone PPI rose 2.3% m/m in July, higher than the predicted 1.1% m/m. Traders are also looking ahead to next week’s ECB meeting.
Comments from a couple of policymakers have led to speculation the ECB may announce a tapering program. Failure to decisively break above 1.1850 lead to a retest of 1.1750.
GBPUSD firmed along with the rest of the major G-10 currencies, rising from 1.3769 to 1.3800.
A break above 1.3800 will extend gains to 1.3950, while a move below 1.3750 targets 1.3650. Traders are marking time ahead of NFP.
USDJPY is trading at the bottom of its 109.92-110.11 range, with prices weighed down by softer US 10-year Treasury yields. Japanese officials are reportedly considering an extension to its COVID-19 state of emergency.
AUDUSD and NZDUSD rallied on the back of broad US dollar weakness. AUDUSD got an added boost from a jump in Australia’s trade surplus to a record AUD 121.117 million.
US weekly jobless claims and the Goods and Services Trade Balance reports are due.
Chart of the Day-WTI oil
FX open, high, low, previous close
Source: Saxo Bank
Today’s Bank of China Fix, 6.4590 Previous day 6.4680
Shanghai Shenzhen CSI 300 rose 0.00% to 4869.41
Analysts continue to suggest PBoC will need to ease monetary policy.
Chart: USDCNY 1 month
Source: Yahoo Finance