It is the “doggiest” days of the dog days of summer and the highlight for FX markets is today’s rare total solar eclipse.
There isn’t any FX data of note. Canada Wholesale Sales for June dropped 0.5% (forecast -0.2%) but if it was bad news, the solar eclipse blocked it out. USDCAD didn’t react. Instead, it continued to inch toward Friday’s 1.2557 low, after spending the overnight Asia and European sessions in a tight 1.2567-1.2605 range.
The CFTC Commitments of Traders report as of August 15, showed that speculative long CAD/short US dollar positions were trimmed by 11,782 contracts. This occurred due to the Trump circus and the stampede by advisors to distance themselves from his administration, a steep plunge in oil and New York Fed President Dudley’s comments that he was still onboard for another rate hike in 2017.
USDCAD wasn’t the only currency pair to be rangebound in a dull trading environment. That was the theme for the overnight session as week.
In Asia, USDJPY sidled lower in a 108.90-1.0941 range on broad dollar weakness and lingering geopolitical risks. South Korea and US wargames started today and they always make North Korea nervous. USDJPY is trading at 108.87 in New York.
The antipodean currencies traded with a negative bias inside narrow ranges in Asia and Europe. That changed when the US reported a weaker than expected Chicago National Activity index. It fell to -0.01 in July, from 0.16 in June. Although this data rarely has an impact, it did today. AUDUSD and NZDUSD both rallied above their overnight peaks and are trading at 0.7940 and 0.7325, respectively.
The Chicago National Trade Index gave EURUSD wings. (or maybe it was the red bull) EURUSD reversed a steady slide from 1.1760 to 1.1732 and climbed to 1.1786 in New York trading.
Sterling followed EURUSD higher but its move was a little more ragged. The Rightmove UK house price index fell 0.9% in August but it wasn’t much of a factor. GBPUSD climbed from an overnight low of 1.2852 to 1.2904 in New York.
Oil prices rocketed higher on Friday, rising from $46.80 to $48.70 and nearly erased the entire week’s losses. There wasn’t a specific reason for the move, but profit-taking and a decline in the Baker-Hughs rig count contributed to the rally. Prices only inched down marginally overnight. Prices have extended their drop in New York and WTI is trading at $48.22/barrel.
Today’s FX market action won’t be a whole lot different from the overnight session. FX traders will look to Wall Street for direction. They probably won’t find any there by the performance of global equity indices, which were mixed. Today’s focus will be on the Total Solar Eclipse
Source: CBC news
USDCAD Technical outlook:
The intraday technicals are bearish while prices are below 1.2630, looking for a break below 1.2550-60 area to extend losses to 1.2415. A move above 1.2630 will target 1.2750.. For today, USDCAD support is at 1.2550 and 1.2510. Resistance is 1.2630 and 1.2690.
Today’s Range 1.2550-1.2630
Chart: USDCAD 1 hour