USDCAD Open (6:00 am) 1.3420-24, Overnight Range: 1.3379-1.3443
- China orders US to close consulate in Chengdu-retaliation for Texas
- Shanghai Shenzhen CSI index 4.39% plunge drives global indexes lower
- US dollar climbs against majors except for JPY and CHF
Source: Saxo Bank/IFXA Ltd
The US dollar opened in New York with gains against the major G-10 currencies except for JPY and CHF.
However, the overnight US dollar strength barely dented the losses it suffered since Monday’s NY open. The Swiss franc led the G-10 majors higher, while gold prices rose 4.5% and came within inches of the “magic” $2000.00 level.
China ordered the US consulate in Chengdu closed, in a tit-for-tat retaliation for its Houston consulate being ordered to close. China’s problems with the US seem to rise in direct proportion to the size of “Sleepy-Joe” Biden’s lead over President Trump in election polling.
EURUSD continues to hang around the 1.1600 area. Yesterday the single-currency ran out of steam at 1.1624 and today, bounced in a 1.1591-1.1621 range. Prices were underpinned by better than expected Eurozone PMI data. Markit Manufacturing PMI for July rose to 51.1 and Services PMI to 55.1. German Manufacturing PMI straddled the growth/contraction line coming in at 50. Lingering support from the EU COVID-19 Relief Fund deal, the resumption of the coronavirus crisis in the US, and the breach of the long-term EURUSD downtrend line are supporting the currency. EURJPY selling overnight may have acted as a brake on EURUSD gains.
GBPUSD chopped about in a 1.2719-1.2772 range with prices supported by widespread, bearish US dollar sentiment. UK June Retail Sales rose 13.9%, and Markit Manufacturing PMI climbed to 53.6, in June.
The data is discounted, as it is distorted from coronavirus lockdown measures. It appears that traders have dispensed with concerns about the UK failing to agree to a trade deal with the EU, at least this week.
USDJPY dropped from 106.88 to 106.18 on renewed risk-aversion sentiment. Prices broke support at 106.50, leaving traders looking for a break of 1065.00 to extend losses to 104.60.
AUDUSD and NZDUSD dropped overnight, and are well below their peak levels reached Wednesday.
Nevertheless, AUDUSD is up 1.23%, and NZDUSD has gained 1.00% since Monday. Both currency pairs are tracking general US dollar sentiment.
USDCAD sold-off yesterday but ran into a wall at 1.3350. It retreated faster than a Bill Morneau cheque for illegal freebies could clear. Prices rose and closed at 1.3408. they continued to climb and are trading in NY above their opening levels. USDCAD direction is being dictated by Wall Street and whatever risk-sentiment is in vogue now. Currently, “risk-off” is the theme.
Today’s US data dump will be a non-event, and the Canadian calendar is empty. Profit-taking ahead of the weekend is what’s driving markets.
USDCAD Technicals: The intraday USDCAD technicals are bullish above 1.3390, having snapped the downtrend that was in place this week. However, only a decisive break above 1.3570 will negate the downtrend that has been intact since March. A break above 1.3450 will extend gains to 1.3490.For today, USDCAD support is at 1.3390 and 1.3360. Resistance is at 1.3450 and 1.3490. Today’s Range 1.3410-1.3490
Chart: USDCAD daily
Source: Saxo Bank
