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USDCAD open 1.2572-76, Overnight Range 1.2557-1.2587, Previous close 1.2580
FX at a Glance:
USDCAD traded in a narrow range. Prices peaked in Asia and bottomed out in Europe, only to open in NY close to where it closed in NY Monday. USDCAD continues to trade with the prevailing US dollar sentiment vs the majors, while ignoring domestic economic data. Bearish WTI oil sentiment ahead of Wednesday’s US CPI report is underpinning prices.
Technical view: The USDCAD technicals are bullish above 1.2510, looking for a break of 1.2605 to extend gains to 1.2730. The June uptrend line is intact above 1.2440. For today, USDCAD support is at 1.2530 and 1.2510. Resistance is at 1.2590 and 1.2605. Today’s range 1.2530-1.2610
Chart USDCAD 4 hour
Source: Saxo Bank
G-10 FX recap and outlook
FX market activity was an exercise in futility, overnight. Traders couldn’t sink their teeth into a convincing narrative and flitted between concerns about spreading coronavirus delta-variant cases derailing a global recovery and Fed-speak from Richmond Fed President Thomas Barkin saying inflation is at 2.0%, “and likely to stay there.” Atlanta Fed President Raphael Bostic agreed. Their comments will be underscored by US CPI data, released tomorrow.
Asia equity indexes closed firmer after a choppy session. Hong Kong’s Hang Seng jumped 1.23%, and Japan’s Nikkei 225 rose 0.24%. European bourses are subdued, posting marginal gains except for the UK FTSE 100, which has ticked lower. WTI oil prices have climbed 1.27% since yesterday’s close, while gold continues to hover around $1730.00 support. US 10-year Treasury yields hung on to yesterday’s gains and are at 1.314%.
EURUSD traded in a 1.1717-1.1742 range with prices undermined by the somewhat hawkish Fed rhetoric and the soft German and Eurozone ZEW reports. The German ZEW Economic Sentiment Indicator fell 22.9 points to 40.4 points compared to July. The statement said, “this points to increasing risks for the German economy, such as from a possible fourth COVID-19 wave starting in autumn or a slowdown in growth in China.” EURUSD has limited support between 1.1700 and 1.1600.
GBPUSD traded sideways in Asia then climbed steadily in Europe, rising from a low of 1.3838 to 1.3872. The weak Eurozone data combined with a somewhat hawkish outlook for the Bank of England led to EURGBP selling, which underpinned GBPUSD. Nevertheless, GBPUSD remains rangebound in a 1.3800-1.4000 band.
USDJPY rallied to 110.544 from 110.28 due to rising US 10-year Treasury yields following the hawkish Fed-speak. Prices need to break above 110.70 or risk retreating to 109.50 again.
Soft domestic data exacerbated AUDUSD and NZDUSD weakness from broad US dollar demand. Australia Business confidence was -8 in July compared to 11 in June. The weakness was due to the coronavirus outbreak.
Chart of the Day- West Texas Intermediate (oil)
FX open, high, low, previous close
Source: Saxo Bank