Source: Pixabay

June 28, 2021

Month end portfolio rebalancing flows ahead

Wall Street futures and oil open nearly unchanged, US 10-year Treasury yields slip

US dollar opens steady after uneventful overnight session

USDCAD open 1.2309-13, Overnight range 1.2290-1.2313,  Previous close 1.2299

FX at a Glance

FX Recap and outlook

It’s hot across Canada and the USA.  The summer version of a polar vortex is roasting both Yanks and Canucks from coast to coast.

Global markets were slow-roasting as well, overnight.  Traders didn’t get excited about the BoJ Summary of Opinions, new two-week stay-at-home orders for Sydney Australia, and the surrounding area, with a lack of economic data encouraging their inertia.

Wall Street equity market performance in June suggests US dollar selling for month-end portfolio rebalancing reasons.

EURUSD opened at the top of its overnight 1.1921-1.1945 band.  Traders ignored comments from ECB Board Member Fabio Panetta who advocated retaining the existing unconventional monetary policy tools. EURUSD has support at 1.1920 and resistance at 1.1980.

GBPUSD started the week in Asia, touching 1.3878, then climbed to 1.3938 in early Europe before drifting to 1.3917 at the NY open.  Traders are content to wait for month-end flows while chortling at the foibles of politicians.  The UK Health Secretary was caught playing “kissy-face” with his secretary, a breach of COVID rules about social distancing.  Adultery is fine, just stay six feet apart.

USDJPY traded choppily with a modestly negative bias in a 110.63- to 110.85 range.  Prices drifted lower in concert with a slide in US 10-year Treasury yields from 1.53% to 1.515%.  The BoJ Summary of Opinions noted that the economy picked up, but remains in a severe situation due to COVID-19.

AUDUSD and NZDUSD bounced around as traders looked for direction.   They didn’t find it, and both currencies are trading in NY at session lows.

USDCAD track broad US dollar moves while ignoring steady oil prices. WTI is remaining resilient in the face of Thursday’s Opec meeting which is expected to end with higher crude production levels.  Traders are looking ahead to April GDP data (forecast -0.9%) due Wednesday and the Canada Day holiday on Thursday.

The US and Canadian economic calendars are empty.

USDCAD technical outlook

The USDCAD technicals are bullish above 1.2180, the uptrend line from the beginning of June low, and guarded by support at 1.2250.  However, the downtrend line from November is intact while prices are below 1.2480. For today, USDCAD support is at 1.2250 and 1.2210.  Resistance is at 1.2340 and 1.2400.   Today’s range 1.2280-1.2360

Chart USDCAD daily

Source: Saxo Bank

FX open, high, low, previous close

Source: Saxo Bank