The USD dollar may have found its mojo; at least for the short term. The greenback opened today with gains against the majors, except for the Japanese yen.
In Asia, the Bank of Japan announced a “tweak” in long/Super long bond purchases, which dropped from 200 billion yen/month to 190 billion/month. USDJPY sank, falling from 113.16 to 112.51 on the news. It drifted back to 112.80 when New York walked in.
It was also a good day for the Australian dollar, at least in Asia. AUDUSD rose from 0.7837 to 0.7862 when Building Permits (Actual 17.1% vs forecast 5.0%) data was released. The gain was erased in Europe on broad US dollar strength and AUDUSD opened in New York at 0.7820. NZDUSD mirrored AUDUSD moves and opened at its overnight low.
Better than expected German Trade and Industrial Production reports combined with a nine-year low for the eurozone Unemployment rate (8.7) helped drive EURUSD below support in the 1.1950-60 area. Stop-loss selling extended EURUSD downside to 1.1926, where it opened this morning.
Sterling chopped about in a 1.3515-1.3581 band. BRC like-for like Retail Sales rose 0.6 %, but weak details led to GBPUSD selling.
EURUSD firmed in Asia but dropped below 1.2000 in Europe. The latest Commitments of Traders report shows traders added to already extremely long EURUSD positions last week, which may have weighed on the single currency.
GBPUSD was weighed down by soft House Price data which drove the currency pair from 1.3584 to 1.3524.
Oil prices opened well-below the overnight peak of $62.53. Prices are supported by the US cold snap, expectations for another large crude draw-down being reported by API at the end of today and the ongoing impact of Opec supply cuts. However, the Iranian oil minister said that OPEC didn’t want Brent Crude prices over $60.00/b (Brent $68.23) due to fears of increasing US Shale production.
USDCAD popped in Europe on the back of broad US dollar strength but the rally petered out below 1.2450 resistance. Expectations for a rate hike next week, supported by yesterday’s positive BoC Business Outlook Survey and bearish technicals will keep the focus on 1.2350. (Friday’s low)
It is not a banner day for domestic or US data today. Canada Housing Starts are forecast at 212,500 while the US Job Openings and Labour Turnover Survey (JOLTS) comprises the US data. Neither are significant. Instead, traders will take their cue from bond markets.
Further weakness in EURUSD (which is over-bought) following the break of support in the 1.1955-60 area may lead to broader US dollar gains.
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish while prices are below 1.2480 representing downtrend line resistance. It is being guarded by resistance in the 1.2450 area which was previous support. A move below 1.2400 will extend losses to Friday’s low of 1.2355 and then 1.2250. For today, USDCAD support is at 1.2400 and 1.2350. Resistance is at 1.2440 and 1.2480
Today’s Range 1.2380-1.2440