- Risk tone improves as Trump fast-tracks COVID-19 vaccine
- Gulf Coast storms underpin oil prices
- US dollar opens modestly lower vs G-10 major currencies.
Source: Saxo Bank/IFXA Ltd
FX Recap and outlook: News that the Trump Administration was considering fast-tracking a UK, experimental COVID-19 vaccine, improved risk sentiment. Asia stock markets closed with gains, European bourses are higher led by a 2.2% gain in the German DAX index, and S&P Futures are also in the green.
FX volumes were light in the last full week of summer holidays. The annual Jackson Hole Symposium sponsored by the Federal Reserve Bank of Kansas City begins Thursday. Markets are content to wait for speeches from Fed Chair Jerome Powell, Bank of England Governor Andrew Baily, and Bank of Canada Governor Tiff Macklem.
EURUSD traded sideways in Asia and then started to climb when Europe opened, rising from a low of 1.1758 to 1.1839. Hopes for both a COVID vaccine and optimistic comments from Fed Chair Powell on Thursday are supporting prices. Traders are ignoring downside risk from a “no-Deal” Brexit. EU Chief negotiator Michel Barnier said an agreement seems unlikely.
GBPUSD has not recovered from Friday’s losses when it fell from 1.3252 to 1.3060. Prices drifted in a 1.3077-1.3099 range until Europe opened, and then squeezed higher, reaching 1.3129. No-deal Brexit fears are weighing on the currency.
USDJPY chopped about in a 105.70-105.93 range. Prices were supported by positive risk sentiment, but soft US Treasury yields capped gains.
AUDUSD outperformed NZDUSD, as the latter suffered from weak economic data. NZ Retail Sales fell 14.2% in Q2 due to the coronavirus and the current lockdowns in Auckland, suggest further economic weakness ahead.
Oil prices are well-above Friday’s low. WTI bottomed out at $1.49/barrel and it is trading at $42.65/b in NY. Prices are underpinned because hurricanes have shut production in the Gulf of Mexico.
USDCAD dropped in concert with broad US dollar weakness. No one cared that Erin O’Toole was elected leader of the Progressive Conservative party.
USDCAD direction continues to be dictated by US dollar moves. Domestic economic data and politics are not factors.
There are not any Canadian or US economic reports of note on tap today
USDCAD Technicals: The intraday USDCAD technicals are bearish below 1.3220, looking for a test of support in the 1.3120 area. A break below 1.3120 targets 1.3050. Speculative positions favour further downside as stop-loss selling is likely on a break below 1.3120. For today, USDCAD support is at 1.3120 and 1.3080. Resistance is at 1.3180 and 1.3220. Today’s Range 1.3120-1.3180
Chart: USDCAD daily
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank