Australia, China, Taiwan closed for holiday
Eurozone Industrial Production rises 0.8% m/m in April (forecast 0.4%)
US dollar opens higher against G-10 majors, Gold slides 1.82%
USDCAD open 1.2154-58, Overnight range 1.2148-1.2167 Previous close 1.2159
FX at a Glance
FX Recap and outlook
Australians are throwing “shrimp on the barbie” in honour of the Queens birthday. Chinese and Taiwanese are singing “row, row, row, your boat,” while watching Dragon Boat races. In Europe, UEF
fans are focused on the Euros (not top be confused with the Euro, which is 1.2114) and their UEFA 2020 football pool, even though it is 2021.
The G-7 meeting came and went with the usual blather and drivel. This gab-fest lacked drama, and hostility.
Hmm what was missing?
The G-7 promised to spend on a global infrastructure plan called “Build Back Better World” to combat China’s Belt and Road initiative. Global equities are higher as traders liked the idea of more government spending.
EURUSD drifted from an Asia low of 1.2095 to 1.2120 in Europe, and opened in NY at 1.2113. A lack of data, and the upcoming FOMC meeting, sidelined traders. ECB Governing council member Robert Holzmann supported the dovish ECB outlook saying that inflation wasn’t in the danger zone, and the pandemic wasn’t over. Better than expected Eurozone Industrial Production data provided some support. To the currency. The intraday EURUSD technicals are bearish below 1.2185, looking for a break below 1.2065 to target 1.2000.
GBPUSD traded quietly in Asia then dropped from 1.4118 to 1.4072 in Europe, before opening in NY at 1.4091. A lack of actionable economic data meant traders focused on the EU/UK spat around the Irish border issue. French President Macron subtly accused the UK of lying about the Brexit agreement. Macron reportedly told Johnson that the UK should keep its word in dealing with the EU. GBPUSD is trading with a bearish bias below 1.4130, looking for a break of support at 1.4070 to target 1.4000.
USDJPY drifted in a 109.62-109.82 range as US 10 year Treasury yields hovered around the 1.46% level, garnering a bit of support from higher stock prices.
AUDUSD and NZDUSD were quiet in narrow ranges due to holidays in China and Australia.
WTI oil prices added to Friday’s gains and climbed from a closing level of $70.81/barrel to $71.67. Prices were supported by the G-7 Build Back Better plan, and expectations for higher crude demand in H2.
USDCAD traders ignored the surge in crude prices, preferring to focus on broad US dollar sentiment ahead of Wednesday’s FOMC meeting. US dollar sentiment is bullish due to concerns the Fed will issue a more hawkish statement in recognition of higher inflation. However, it is probably too soon for the Fed to admit it is wrong.
Canada Manufacturing Sales are expected to have dropped 0.1% m/m in April (March 3.5% m/m).
USDCAD technical outlook
The USDCAD technicals are bullish. The uptrend line from the June 1 low of 1.2008 is guarded by support (former resistance) at 1.2025, and looking to break 1.2180 to extend gains to 1.2250. For today, USDCAD support is at 1.2120 and 1.2080. Resistance is at 1.2070 and 1.2200. Today’s range 1.2090-1.2170
Chart USDCAD 4 hour
Source: Saxo Bank
FX open, high, low, previous close
Source: Saxo Bank