The Canadian Dollar continues to rise despite falling oil prices!
The Canadian Dollar rose against it’s US counterpart on much better-than-forecast retail sales data. Declining volatility in the currency markets saw the Dollar Index (USD/DXY) finish virtually flat at 97.534 from 97.551 yesterday. Sterling closed little changed even after BOE MPC member Kristin Forbes hawkish comments.
US Treasuries were little changed, with the Ten-year bond yield finishing at 2.15% (2.16%).
Oil prices steadied after 4 days of declines. Brent Crude Oil finished up 0.6% at US$ 45.27 (US$44.90 yesterday).
Stocks finished flat at the close paring gains earlier in the day. The US DOW closed down 0.06%.
EUR/USD – drifted down to end at 1.1152 from 1.1167 yesterday.
GBP/USD – steadied to close at 1.2683 (1.2673 yesterday).
USD/JPY – finished at 111.32, little-changed from 111.38 yesterday.
USD/CAD – slumped to close at 1.3234 from 1.3325 yesterday. The Loonie was the most active of the major currencies.
AUD/USD – drifted lower, finishing at 0.7540 (0.7555 yesterday).
NZD/USD – gains slightly post RBNZ and closes at 0.7265 (0.7252 yesterday).
Outlook: FX volatility declined yesterday as the northern hemisphere summer doldrums appear to be setting in. The Canadian Dollar was the exception and the star in an otherwise dull market. The Loonie could provide some good trading opportunities ahead.
Political uncertainty, central bank policy
divergence and market positioning could see volatility return.
USweekly Jobless Claims released yesterday totaled 241,000 exactly as forecast.
Today sees French, German and Eurozone Flash Manufacturing and Services PMI data (GMT 7-8 am, June 23/Local Time 5-6 pm, June 23).
Markit US Preliminary Manufacturing and Services PMI are out (GMT 1.45 pm, June 23/Local Time 11.45 pm, June 23). Manufacturing PMI is forecast to rise to 53.0 from 52.7.
US May New Home Sales data is expected to rise to 600,000 units from 569,000 units. (GMT 2 pm, June 23/Local Time 12 am, June 24)
EUR/USD – Strong support is now at 1.1130/40 and that should hold today. The resistance at 1.1170-80 is equally strong. Last night’s trading range was 38pips. Likely range today is 1.1130-70.
GBP/USD – The initial rally after Forbes’s remarks failed to clear above 1.2700 (1.2691). Forbes, who is an external member of the MPC, and an American said that Sterling’s weakness would have a lasting effect on inflation. Forbes also stated that further Brexit uncertainty might affect consumers or business more in the future. GBP/USD traded in a range between 1.2654 and 1.2691. Which is where the support and resistance levels sit. Likely range 1.2650-1.2700. The Brexit uncertainty still puts more downside pressure on the Pound for now.
USD/JPY – Good support lies at 110.90. There is immediate resistance at 111.50. The upside momentum has slowed and we should see some consolidation between 110.80-111.80. US Ten Year bond yields finished at 2.15%, down one basis point. US Ten Year Japanese JGB’s closed at 0.04% from 0.05% yesterday.
USD/CAD – struggled to rally above 1.3350 in spite of the weaker oil prices and stronger US Dollar. The stronger-than-forecast domestic headline and core retail sales data accelerated the downside USD/CAD move. Canadian Core Retail Sales rose 1.5% against a forecast rise of 0.6% and a previous fall of 0.1%. The Dollar slumped to an overnight low of 1.3208, settling at 1.3235 this morning. Market positioning in this currency is still close to an extreme. Net speculative Canadian Dollar shorts were pared to -CAD 88,595 contracts (week ended June 13) from the previous weeks -CAD 94,501 contracts. However, the net total short CAD contracts are still at four-year highs. Immediate resistance lies at 1.3270 and then 1.3300. There is good support at 1.3200 and 1.3190. If the US Dollar’s upside should stall, the Loonie would be poised for strong gains.
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