Jobless Claims fall 26,000 to 360,000
BoC forecast downgrades, boost USDCAD
US dollar opens with losses, but clawing them back in NY trading
USDCAD open 1.2506-10, Overnight range, 1.2504-1.2547, Previous close 1.2511
FX at a Glance
FX Recap and outlook
The US released a slew of mostly positive economic reports. Jobless claims were right on the money and at 360,000 was a new post-pandemic low. The Philadelphia Fed Manufacturing Index missed forecasts but at 21.7 (June 30.7), while the Empire Manufacturing Index was well above forecasts.
The news did not have much impact on FX markets, but it helped S&P 500 futures recover some of the morning’s losses. Even so, Wall Street is poised to open in negative territory.
It is Day 2 of Fed Chair Jerome Powell’s Congressional testimony. He didn’t deviate from the Feds dovish message yesterday, and that is unlikely to change today. Powell repeated that the US economy “is still a long ways off” from achieving the Fed’s dual mandate.
EURUSD climbed from 1.1790 at yesterdays NY open, peaked at 1.1850 just before NY opened today, and is down to 1.1808 in NY. The mostly positive US data continues to suggest US economic outperformance compared to the Eurozone. Traders ignored comments from ECB Board Member and Bank of Italy Governor Ignazio Visco. He warned, “We have to avoid tapering before the time comes that we’re really confident we’re back where we should.” A EURUSD break above 1.1880 or below 1.1770 would spark about a 0.0100 point move.
GBPUSD churned in a 1.3815-1.3898 range and is below the half-way point of that range in NY trading. Better than expected UK employment data underpinned prices while dovish-speak from Bank of England Governor Andrew Bailey comments were a drag on gains. A break above 1.3910 targets 1.4000.
USDJPY traded in a 109.73-110.02 range, well below yesterdays Asia peak of 110.70. Prices are weighed down by Powell’s dovish outlook and by the slide in 10-year Treasury yields.
AUDUSD and NZDUSD traded choppily in narrow ranges. Both currencies were supported by better than expected China data, but ongoing coronavirus lockdown measures capped AUDUSD gains.
Oil prices slumped, falling from $75.36/barrel yesterday to $71.71/b today. Traders ignored yesterday’s news that the EIA reported a 7.8 million drop in US inventories but paid attention to Opec developments. The cartel reached an agreement with the UAE, which gives the UAE a higher quota.
USDCAD bounced between 1.2503 and 1.2562 and is attempting a topside break out. The rally is fueled by the drop in oil prices, expectations of US economic growth outperformance compared to Canada, and bullish technicals. The slightly more dovish than expected BoC statement, also underpinned prices
USDCAD technical outlook
The USDCAD technicals are bullish. The intraday uptrend line comes into play at 1.2470, while the uptrend line from the beginning of June is at 1.2310. However, there is plenty of resistance between 1.2550 and 1.2600 guarding major resistance at 12650. For today, USDCAD support is at 1.2490 and 1.2450. Resistance is at 1.2550 and 1.2590. Today’s range 1.2480-1.2550.
Chart USDCAD 4 hour
Source: Saxo Bank
FX open, high, low, previous close
Source: Saxo Bank