This morning’s slate of US economic releases didn’t do US dollar bulls any favours. US Personal Income and Spending rose 0.4% in April, exactly as predicted. Case-Shiller Home Price Index rose 5.9% vs. forecast of 5.7% gains and unchanged from the previous month.
The data did not derail the mild intraday uptrend in EURUSD and left USDJPY consolidating inside a 110.80-111.00 band. Traders are looking past today’s data and ahead to Wednesday’s month end portfolio rebalancing flows and Friday’s US employment report.
FX traders in the US and UK returned to work after a long weekend with a lot of news to digest, none of which translated into large FX moves.
Asia walked in yesterday to another North Korea missile test and another UK election poll. USDJPY gapped lower at the open in Asia but rebounded quickly. It traded sideways in a 111.15-111.40 range until Europe opened on Tuesday. Sellers emerged and USDJPY dropped to a low of 110.78.
AUDUSD was range bound on Monday but another drop in iron ore prices sent AUDUSD from 0.7440 to 0.7415. AUDUSD rallied in Europe and is trading at 0.7451 in New York. NZDUSD traded like AUDUSD and is now slightly higher then where it closed on Friday.
Sterling recovered on Tuesday as UK traders didn’t seem concerned about the weekend’s election poll showing the Tory lead over labour shrinking.
EURUSD has shrugged off earlier weakness and rallied back to Friday’s closing level. Earlier, EURUSD was under pressure from soft German inflation data. Earlier, ECB President Mario Draghi’s dovish remarks to the EU parliament added to the single currency’s woes as did a report that Greece would opt out of bail-out funds. It was later denied.
USDCAD rallied from Monday’s low of 1.3428 to 1.3501 after weaker than expected Canada economic data. The Current Account deficit widened, Raw Materials Price Index and Industrial Product Price Index missed thee forecasts. A steady drift lower in oil prices served added to USDCASD demand
Oil prices continued to consolidate within a $48.00-$53.00 trading range with traders weighing extended Opec production cuts against rising US oil production.
USDCAD Technical outlook:
The USDCAD technicals are bearish while prices are below 1.3505. They are looking for a break below support between 1.3380 and 1.3400 which stems from prior support/resistance levels and the uptrend line from April 13. For today, USDCAD support is at 1.3440 and 1.3380. Resistance is at 1.3505 and 1.3550
Today’s Range 1.3440-1.3510
Chart: USDCAD 30 minute
Source: Saxo Bank