This morning’s US Personal Income/Expenditure (PCE report didn’t do the US dollar any favours.) It didn’t do much damage either but instead merely left the bearish sentiment intact. A downward revision to May and April income didn’t help.
New York markets are looking ahead to the ISM Manufacturing PMI index, due shortly. A better than expected result (forecast 56.5) may lead to a US dollar rally, mostly as an excuse to book some profits after the greenbacks recent decline.
Oil is seeing profit taking. WTI oil declined from an overnight peak of $50.40 and is currently trading (6:00 am PST) at 49.80. Prices have been supported by jitters surrounding US sanctions on Venezuela oil, US crude inventory drawdowns, and next week’s Opec /non Opec meeting in Abu Dhabi to discuss improved production cut compliance.
USDCAD has been a laggard in the broad US dollar sell-off. That is due, in part, because it led the dollar down move back on June 12 when the Bank of Canada turned hawkish. The break above $50.00 /barrel in WTI was mostly ignored by USDCAD traders. That may be because, the speculative community is now long Canadian dollars. Another reason, may be due to Friday’s US employment data. An upside surprise could lead to a US dollar rally.
In Asia, China data and the Reserve Bank of Australia were the focus. The RBA left rates unchanged and warned that the high level of AUDUSD may result in a slower pick-up in economic activity and inflation, than what is forecast.
China’s Caixin PMI was 51.1, beating the 50.4 that was forecast which underpinned both AUDUSD and NZDUSD. NZDUSD peaked early at 0.7523 and slipped to 0.7484 in early New York trading.
Euro area Manufacturing PMI’s were slightly below forecasts. The Eurozone PMI also missed, coming in at 56.6 instead of 56. 8.. That was enough to take EURUSD from its peak of 1.1843 down to 1.1808 where it is in New York trading. Eurozone GDP growth was 0.6%. q/q, as expected.
GBPUSD popped and is flirting with major resistance in 1.3250 area, supported by better than expected UK PMI data.
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish. However, minor support in the 1.2410 area has led to 1.2410-1.2550 consolidation. A break above 1.2550 would suggest a short-term bottom is in place and target 1.2770. A move below 1.2410 puts 1.2340 in play and opens the door to a further drop to 1.1960. For today, USDCAD support is at 1.2430 and 1.2410. Resistance is at 1.2490 and 1.2520
Today’s Range 1.2430-1.2520
Chart: USDCAD 30 minute