New York traders walked in to find the US dollar pushing higher against the majors except for the Japanese yen. The positive dollar sentiment turned negative, albeit mildly, after this morning’s US economic releases were below the forecasts.
The weekly initial jobless claims report posted a gain of 244,000 against expectations for just a 240,000 increase. The difference is insignificant but in thin summer markets, its importance is elevated. July Producer Price data was also released. Headline PPI was 1.9%, year over year, unchanged from the June result but below the forecast for a 2.1% increase. Core PPI came in at 1.8% below forecasts and the June number.
Overnight, EURUSD drifted lower weighed down by Wednesday’s US data, doveish Fed-speak and stretched positioning. EURUSD traded in a 1.1705-1.1769 range and is trading in New York at 1.1732.
Sterling bounced inside a 1.2953-1.3013 range. It peaked in Asia and bottomed out in the European morning. UK data was mixed. The trade deficit widened to GBP 4.56 billion while Manufacturing Production and Industrial production beat the May numbers. GBPUSD bounced back to 1.2995 after the data was released.
USDJPY continued to suffer the lingering effects from risk aversion sparked by Trump and North Korea. It is starting today’s New York session at the bottom of the 109.83-110.17 overnight range.
The Reserve Bank of New Zealand (RBNZ) left the policy rate (OCR) unchanged at 1.75%, but the outlook for the OCR) was not as doveish as expected. NZDUSD rallied to 0.7366 Then Assistant Governor John McDermott, said there was a need for NZDUSD to adjust lower. It did. NZDUSD dropped and kept on dropping until it hit 0.7254. It is trading in New York at 0.7277 as of 6:00 am PDT.
Aussie rallied early but succumbed to the broad US dollar strength. AUDUSD traded in a 0.7868-0.7909 band and opened at the low end of that range.
USDCAD traded with a bid throughout the overnight session and opened this morning testing resistance at 1.2730. It held. WTI oil prices above $50.00/barrel led to fresh USDCAD selling and the currency dropped to 1.2678. so far.
USDCAD Technical outlook:
The intraday USDCAD technicals are turning bearish if the currency pair can sustain this morning’s break below 1.2680. If so, it will lead to a test of support at 1.2620 with added support at 1.2560. A move above 1.2730 would extend gains to 1.2770. A break above 1.2770 could get nasty as there isn’t much in the way of resistance until 1.2940 That was where USDCAD was before the Bank of Canada raised interest rates. For today, USDCAD support is at 1.2680 and 1.2652. Resistance is at 1.2730 and 1.2770
Today’s Range 1.2630-1.2730
Chart: USDCAD 1 hour