Yesterday, the US dollar appeared invigorated by better than expected ISM Manufacturing data. This morning, the dollar remains firm but in a lethargic manner.
The US dollar is a tad softer in New York trading after opening with gains across the board, supported by the positive US interest rate outlook and yesterday’s strong ISM Manufacturing report. Asia equity markets took their cue from Wall Street and rallied. China closed for a holiday.
EURUSD dropped in Asia, but those losses reversed when the European session started. Better than expected Eurozone PPI data (Actual 2.5% vs forecast 2.3%, y/y) supported the single currency. EURUSD topped the overnight high and traded at 1.1761. Germany closed for the Unification Day holiday which reduced liquidity.
UK September Construction PMI was 48.1 vs forecast of 50.8. GBPUSD sank on the result dropping to 1.3231 from 1.3286. It added to the losses in New York, toucing 1.3224.
In Asia, AUDUSD got knocked for a loop. The Reserve Bank of Australia (RBA) left rates unchanged, as expected and delivered a statement suggesting they would stay that way for a long time.
The RBA wrote “An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast” That statement led to AUDUSD dropping from 0.7883 to 0.7787, before bouncing to 0.7810 when New York opened.
In New Zealand, Q3 NZIER Business Confidence dropped to 5% from 18% previously, but it was expected. NZDUSD fell to 0.7150 from 0.7195 and opened in New York at 0.7170.
USDJPY rallied, rising from 112.67 to 113.18, supported by higher equities, the US interest rate outlook and Japanese political developments.
Oil prices traded in a narrow range after yesterday’s drop on fresh overs-supply concerns. WTI traded in a $50.37-$50.65/b range. Gold prices eased lower on the US interest rate outlook.
USDCAD traded with a bullish bias overnight but was unable to break resistance in the 1.2530-40 area. Lower oil prices and a cautious Bank of Canada have underpinned the currency pair.
It is shaping up to be a quiet, rangebound US session.There isn’t any data of note from the US or Canada. American’s are still trying to understand how the Las Vegas massacre could happen. It is also a heartbreaker for music fans. Tom Petty has taken his last dance with Mary-Jane, and the world is a sadder place
USDCAD Technical outlook:
The USDCAD technicals are bullish in a rising channel bound by 1.2440 on the bottom and 1.2620 at the top. A break above resistance at 1.2540 will target the top of the channels and then 1.2750. For today, USDCAD support is at 1.2490 and 1.2450. Resistance is at 1.2540 and 1.2610
Today’s Range 1.2510-1.2580
Chart: USDCAD 4 hour