The famous British “stiff upper lip” was on full display today. Traders ignored another UK terror attack and rallied GBPUSD from its overnight low of 1.2857 to 1.12892. It drifted off the high in New York trading on weaker-than expected UK Services PMI data (Actual 53.8 vs. previous 55.8). Traders are also keeping one eye on UK election polls. An ICM survey pegs the Conservative with an 11-point lead over labour.
Geopolitics also played a role in overnight markets Saudi Arabia, United Arab Emirates, Bahrain, Egypt, and East Libya cut off diplomatic ties with Qatar after accusing it of supporting terrorism. They have banned air and sea-travel to and from Qatar as well.
Oil prices rallied on the news, rising from $47.70/b to $48.35, but the gains were not sustained. Prices have since retraced the entire move and are now at $47,23 as supply disruption concerns appear to be unwarranted.
European markets were quiet due to a number of centers closed to celebrate “Whit Monday”. EURUSD traded sideways until New York opened and then dropped. The prospect of a doveish ECB statement on Thursday, is weighing on the currency.
NZDUSD see-sawed inside a 0.7116-0.7144 range overnight. Trading was lighter than usual due to a holiday in New Zealand.
In Asia, firm Australia data gave AUDUSD a boost, lifting the currency pair from 0.7420 to 0.7484. Positioning ahead of Tuesday’s Reserve Bank of Australia policy meeting may have played a role.
The moderately firmer tone to the US dollar and renewed oil price weakness lifted USDCAD off its overnight low of 1.3464 to 1.3492, so far.
Today’s US data (Markit Services PMI, ISM Services PMI and Factory orders) need to be well outside of the forecasts to have much of an impact on FX. There isn’t any data from Canada.
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish while prices are below 1.3540 supported by Friday’s move below 1.3510. However, support in the 1.3430-60 area needs to be cleared to extend losses to 1.3380. A break above 1.3510 puts the topside back in focus. For today, USDCAD Support is at 1.3460, 1.3430 and 1.3410. Resistance is at 1.3510 and 1.3540
Today’s Range 1.3460-1.3540
Chart USDCAD 30 minute
USDMXN had a wild overnight session. In the early going, the prospect that the ruling Institutional Revolutionary Party (PRI) would lose a key election, boosted USDMXN from 18.7253 on Friday to 18.8180 yesterday. News that the PRI prvailed and squeaked on a victory drove USDMXN down to 18.3563. It is trading at 18.3936 at the moment.
USDMXN 1 hour
Source: Saxo Bank