The US dollar opened a tad softer after a quiet overnight session. Asia equity indices were mixed. The Nikkei squeezed out a 0.44% gain to 22,697.36. while Australia’s ASX and China indices moved lower. US 10-year Treasury yields were slightly firmer. Traders were content to await Fed Chairman Jerome Powell’s testimony to Congress, later this morning.
The media is apocalyptic over President Trump’s performance at his press conference with Vladimir Putin in Helsinki, yesterday. For example, an indignant Globe and Mail headline reads “In extraordinary statement, Trump refuses to take U.S. intelligence agencies’ word over Putin’s on election meddling.” Was President Trump expected to call Mr. Putin a liar in front of the world media? The reporter conveniently ignores the fact that Mr. Trump has repeatedly denied Russian meddling in the election.
The Helsinki circus did not have any impact on FX markets. NZDUSD gained 0.76%, rising from 0.6760 to 0.6839. It was a nasty short squeeze in a delayed reaction to the New Zealand inflation report. (Q2 CPI Actual 1.5% vs forecast 1.6%). AUDUSD traded higher, but the gains were far more modest.
USDJPY traded choppily in a 112.23-112.55 range with concerns of a hawkish bias to Powell’s testimony out-weighing risk-aversion fears from an expanding trade war.
Sterling bounced about in a 1.3228-1.3267 range. The UK employment report was close enough to forecasts, and its impact was fleeting. Unemployment was unchanged at 4.2%, and average earnings were as expected. Bank of England Governor Mark Carney said there were “big economic consequences,” if the UK leaves the EU without a deal. He tempered that statement by saying it was too early to make judgements.
EURUSD is trading in New York in the middle of its overnight, 1.1702-1.1743 range.
Oil prices remain under pressure due to concern about production increases from Saudi Arabia and Russia. Also, US government officials are talking about granting waivers to some countries importing Iranian oil.
USDCAD drifted lower in line with the broad US dollar weakness, but that changed in New York trading Prices climbed steadily ahead of Fed Chair Powell’s testimony. Canadian Manufacturing Shipments data beat forecasts, but a lot of the gain was recapturing the previous month’s loss. Canadian dollar direction continues to be at the mercy of broad US dollar sentiment. USDCAD selling because of Bank of Canada Governor Poloz’s slightly hawkish, upbeat domestic economic outlook is being offset by USDCAD demand on US growth prospects, US rate outlook and elevated trade tensions.
USDCAD Technical Outlook
USDCAD is in a well-defined uptrend from the middle of April that comes into play at 1.3080. A decisive break below this level would targets support at 1.3050, 1.3005 and 1.2950. The intraday techincals are bullish, looking for a move above 1.3150 to extend gains to 1.3190. For today, USDCAD support is at 1.3110 and 1.3090. Resistance is at 1.3160 and 1.3210
Today’s Range 1.3140-1.3210.