GBP/USD Daily Forecast – U.S. Dollar Gains Ground After Yesterday’s Sell-Off

British Pound Is Moving Lower Against U.S. Dollar

GBP/USD is currently trying to settle back below the support at 1.3950 while the U.S. dollar is gaining some ground against a broad basket of currencies.

The U.S. Dollar Index failed to settle below the support level at the 50 EMA at 91.90 and is trying to get back above the 92 level. In case this attempt is successful, the U.S. Dollar Index will move towards the resistance at 92.15 which will be bearish for GBP/USD.

There are no important economic reports scheduled to be released in the UK today so foreign exchange market traders will focus on the economic data from U.S.

Analysts expect that Personal Income declined by 0.3% month-over-month in June after falling by 2% in May. Meanwhile, Personal Spending is projected to grow by 0.7%.

Traders will also have a chance to take a look at the final reading of Consumer Sentiment report for July which is projected to show that Consumer Sentiment declined from 85.5 in June to 80.8 in July.

Technical Analysis

gbp usd july 30 2021

GBP/USD is testing the nearest support level which is located at 1.3950. In case this test is successful, GBP/USD will move towards the next support at 1.3920.

In case GBP/USD gets below the support at 1.3920, it will head towards the next support at 1.3900. A successful test of this level will open the way to the test of the support which is located at the 50 EMA at 1.3880.

On the upside, GBP/USD needs to get back above 1.3950 to have a chance to develop upside momentum in the near term. The next resistance level for GBP/USD is located at the recent highs at 1.3980.

If GBP/USD manages to settle above the resistance at 1.3980, it will move towards the next resistance level at 1.4000.

A move above the resistance at 1.4000 will push GBP/USD towards the resistance at 1.4020. In case GBP/USD gets above this level, it will head towards the next resistance level at 1.4040.

For a look at all of today’s economic events, check out our economic calendar.

A Busy Economic Calendar Puts the EUR, the Loonie, and the Greenback in Focus

Earlier in the Day:

It was a busy quiet start to the day on the economic calendar this morning. The Kiwi Dollar and the Japanese Yen were in action in the early part of the day. Later this morning, the Aussie Dollar will also be in focus.

For the Kiwi Dollar

Consumer confidence and housing sector data were in focus this morning.

In June, building permits rose by 3.8%, reversing a 2.40% slide in May. Economists had forecast a 1.10% decline.

Of greater significance, however, was a modest fall in consumer confidence.

In July, the ANZ Consumer Confidence Index fell from 114.0 to 113.1. Economists had forecast a decline to 113.0.

According to the July survey,

  • A good time to buy a major household item rose 2 points to +24, a fresh post-COVID high.
  • Sentiment towards the finances in a year’s time also improved. A net 23% expect to be better off this time next year, up 1 point.
  • This was in contrast to sentiment towards current financial situations, which fell 6 points to +8%.
  • Views towards the economic outlook were also mixed.
  • Perceptions regarding the next year’s economic outlook fell 5 points to -2%, while the 5-year outlook rose by 2 points to +12%.

The Kiwi Dollar moved from $0.70039 to $0.70162 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.01% to $0.7011.

For the Japanese Yen

Industrial production increased by 6.2% in June, according to prelim figures, reversing most of a 6.5% slide from May. Economists had forecast a 5.1% increase.

According to the Ministry of Economy, Trade and Industry,

  • Industries that mainly contributed to the increase were motor vehicles, production machinery, and electronic parts & devices.
  • Industries that mainly contributed to the decrease were transport equipment (excl. motor vehicles) and ceramics, stone, & clay products.

According to the Ministry of Economy, Trade and Industry, retail sales increased 3.1%, reversing a 0.4% decline from May. Economists had forecast a 3.6% slide.

The Japanese Yen moved from ¥109.416 to ¥109.402 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.05% to ¥109.420 against the U.S Dollar.

For the Aussie Dollar

Wholesale inflation and private sector credit figures will draw interest.

On the inflation front, the annual wholesale rate of inflation is forecast to accelerate from 0.2% to 3.5%.

Quarter-on-quarter, economists have forecast for the producer price index to rise by 2.1%, following a 0.4% increase in the 1st quarter.

At the time of writing, the Aussie Dollar was flat at $0.7396.

The Day Ahead

For the EUR

It’s a particularly busy day ahead on the economic data front, with the 2nd quarter GDP numbers, consumer spending, and inflation in focus.

French, German, and Eurozone 1st estimate GDP numbers for the 2nd quarter will be the key stats of the day, however.

At the time of writing, the EUR was up by 0.03% to $1.1891.

For the Pound

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats to provide the Pound with direction.

The lack of stats leaves the IMF’s growth forecasts for the UK, delivered earlier in the week, to continue to resonate.

At the time of writing, the Pound was up by 0.05% to $1.3966.

Across the Pond

It’s a busy day ahead on the economic calendar.

Personal spending and inflation figures for June together with finalized consumer sentiment figures for July will be in focus.

Barring any marked revisions to prelim consumer sentiment figures, expect the personal spending and inflation figures to be key.

Following the FED’s policy decision on Wednesday, any FOMC member chatter will also need monitoring.

On Thursday, the U.S Dollar Spot Index ended the day down by 0.50% to 91.864.

For the Loonie

It’s also a busy day on the economic calendar. Wholesale inflation, RMPI, and GDP numbers will be in focus.

With a lack of stats through much of the week, expect Loonie sensitivity to today’s numbers.

Away from the economic calendar, crude oil prices and market risk sentiment will also influence.

At the time of writing, the Loonie was down by 0.01% to C$1.2449 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Dollar Index (DX) Futures Technical Analysis –

The U.S. Dollar fell to its lowest level since June 29 on Thursday, a day after the U.S. Federal Reserve said the job market still had “some ground to cover” before it would be time to ease monetary stimulus, knocking the wind out of a month-long rally by the greenback.

At 20:01 GMT, September U.S. Dollar Index futures are trading 91.875, down 0.442 or -0.48%.

The index, which is still up 1.6% since the Fed’s June 16 meeting, after a hawkish shift from the U.S. central bank, found little support from U.S. economic data on Thursday.

Gross Domestic Product data showed that while the U.S. economy grew solidly in the second quarter, boosted by massive government aid, growth fell short of economists’ expectations.

GDP increased at a 6.5% annualized rate last quarter, the Commerce Department said on Thursday, well below the 8.5% rate economists polled by Reuters had forecast.

Meanwhile, a separate data point showed that 400,000 people filed initial claims for unemployment benefits for the week ended July 24. That level is nearly double the pre-pandemic norm and above a Dow Jones estimate of 385,000.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down earlier on Thursday when sellers took out a pair of main bottoms at 92.075 and 91.995. A trade through the closing price reversal top at 93.195 will change the main trend to up.

The first support is a pair of long-term retracement levels at 91.945 to 91.850.

If the selling pressure continues then look for another steep break into another pair of retracement levels into 91.490 to 91.370.

On the upside, the nearest resistance is a long-term Fibonacci level at 92.495.

The main range is 89.545 to 93.195. The primary target of this current sell-off is its retracement zone at 91.370 to 90.940.

Daily Swing Chart Technical Forecast

The direction of the September U.S. Dollar Index into the close on Thursday is likely to be determined by trader reaction to 91.950 and 91.850.

Bullish Scenario

A sustained move over 91.950 will indicate the presence of buyers. If this is able to generate enough upside momentum over the short-run, we could see a rebound rally into the Fibonacci level at 92.495.

Bearish Scenario

A sustained move under 91.850 will signal the presence of sellers. This could trigger another acceleration to the downside with the next major area a potential support cluster at 91.490, 91.505 and 91.370.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – Test Of Support At 1.2450

Canadian Dollar Rallies As Commodity Markets Move Higher

USD/CAD is currently trying to settle below the support level at 1.2450 while the U.S. dollar is under significant pressure against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get below the 92 level and is currently testing the support at the 50 EMA at 91.90. If this test is successful, the U.S. Dollar Index will move towards the next support level at 91.80 which will be bearish for USD/CAD.

Today, foreign exchange market traders had a chance to take a look at the latest job market data from U.S. Initial Jobless Claims declined from 424,000 (revised from 419,000) to 400,000 compared to analyst consensus of 380,000. Continuing Jobless Claims increased from 3.26 million (revised from 3.24 million) to 3.27 million compared to analyst consensus of 3.2 million.

Second-quarter GDP Growth Rate report showed that GDP grew by 6.5% quarter-over-quarter compared to analyst consensus of 8.5%. Pending Home Sales decreased by 1.9% month-over-month in June while analysts expected that they would grow by 0.3%.

All economic reports from U.S. missed analyst estimates which put additional pressure on the American currency. Meanwhile, Canadian dollar moved higher as commodity markets rebounded.

Technical Analysis

usd cad july 29 2021

USD to CAD managed to settle below the support at 1.2480 and is testing the next support level at $1.2450. If USD to CAD settles below this level, it will move  to another test of the next support level which is located at the 50 EMA at 1.2435.

A move below the 50 EMA at 1.2435 will push USD to CAD towards the support at 1.2420. If USD to CAD declines below 1.2420, it will move towards the support level at 1.2385. A successful test of this level will open the way to the test of the support at 1.2350.

On the upside, the previous support level at 1.2480 will serve as the first resistance level for USD to CAD. In case USD to CAD manages to get back above this level, it will move towards the resistance at 1.2500. A move above this level will push USD to CAD towards the resistance at 1.2520.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD: U.S. Dollar Weakness Pushes Loonie to Two-Week High; Volatility To Last

The Canadian dollar rose against its U.S. counterpart on Thursday as the U.S. dollar tumbled to a month low after the Federal Reserve reiterated that the interest rate will remain zero for a long time.

Today, the dollar to loonie conversion fell to 1.2447, from 1.2527 on Wednesday. The Canadian dollar had lost about 3% in June – posting the biggest monthly drop since March 2020, the early days of the pandemic, and weakened about 0.6% so far this month.

“Canada’s headline inflation faced a slowdown (from 3.6% to 3.1% YoY) in June. That is probably a welcome development by the Bank of Canada as it supports the central bank’s view that inflation spikes will have a transitory nature. That said, it will hardly impact the BoC’s tapering plans, in our view. After all, the jobs market has proven to be very strong in the recovery and core inflation was broadly unchanged (and above target) from May to June,” noted Petr Krpata, Chief EMEA FX and IR Strategist at ING.

“We remain of the view that the BoC will end asset purchases by the end of 2021 and that the case for the first hike in 2022 is getting stronger. From an FX perspective, we think that the central bank’s hawkishness can help CAD outperform once market sentiment improves and investors find fresh interest in entering reflationary/carry trades.”

The dollar index, a measurement of the dollar’s value relative to six foreign currencies, hit this month’s low of 91.910 and was trading 0.42% lower at 91.934 at the time of writing.

Following the Fed’s monetary policy announcement on Wednesday, the dollar lost momentum after it noted that a rate hike in the near future is unlikely. No hints were given by the U.S. central bank about reducing its purchases of government bonds.

“In terms of the dollar, the currency was slightly softer following the meeting. This suggests currency watchers may have been expecting somewhat stronger guidance from the Fed on the ‘tapering’ issue,” noted analysts at AIB.

“As the European session gets underway this morning, the modestly softer dollar tone is reflected in EUR/USD trading up at the midpoint of $1.18-1.19, while GBP/USD has regained some ground in $1.39 territory. Elsewhere, EUR/GBP remains pinned down near to the 85p mark.”

Nevertheless, the USD is at high risk of recovering over the next year. This is partially due to expectations of two rate hikes in 2023 by the Fed. A stronger dollar and growing odds of the Fed tightening monetary policy sooner than expected would push the USD/CAD pair higher.

Oil prices in Canada have edged higher amid hopes of an inventory report that is expected to be bullish. Higher oil prices result in increased U.S. dollar earnings for Canadian exporters, which translate to a stronger loonie. U.S. West Texas Intermediate (WTI) crude futures traded higher by 0.67 cents, or 0.94%, to $73.06 a barrel.

Silver Price Daily Forecast – Silver Rallies As Dollar Dives After Fed’s Comments

Weak Dollar And Dovish Fed Provided Strong Support To Silver

Silver is currently trying to settle above the 20 EMA at $25.60 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index is currently trying to get to the test of the 50 EMA at 91.90. If the U.S. Dollar Index manages to settle below the 50 EMA, it will gain additional downside momentum which will be bullish for silver and gold price today. Weak dollar is bullish for precious metals as it makes them cheaper for buyers who have other currencies.

Gold also enjoys support from weak dollar. Gold has recently managed to get above the 50 EMA at $1810 and is moving towards July highs near $1835. A move above the resistance at $1835 will open the way to the test of the $1850 level which will be bullish for silver and other precious metals.

Gold/silver ratio gained significant downside momentum and is moving towards the 71 level. If gold/silver ratio declines below this level, it will continue its downside move and head towards the 20 EMA at 70.60 which will be bullish for silver.

Technical Analysis

silver july 29 2021

Silver has recently managed to get above the resistance at $25.50 and is testing the next resistance level which is located at the 20 EMA at $25.60. RSI remains in the moderate territory despite the strength of the current upside move, and there is plenty of room to gain additional upside momentum in case the right catalysts emerge.

If silver settles above the 20 EMA, it will get to the test of the next resistance level at $25.80. A move above this level will open the way to the test of the resistance at the 50 EMA at $26.10. In case silver gets above the 50 EMA, it will move towards the resistance at $26.30.

On the support side, a move below $25.50 will push silver towards the support at $25.30. If silver declines below this level, it will head towards the next support which is located at $25.00. A successful test of this level will open the way to the test of the support at $24.70.

For a look at all of today’s economic events, check out our economic calendar.

Dollar Comes Back to The Bearish Trend. Gold and Silver Rise

  • Jerome Powell buried the USD, helped precious metals and as almost always…stocks
  • U.S. dollar index breaks the lower line of the channel up formation and goes down
  • Silver comes back inside of the symmetric triangle pattern, that’s bullish
  • Gold climbs higher
  • The NZDJPY is creating an inverse head and shoulders pattern on an important support
  • The CHFJPY goes higher after a very handsome technical setup, which we discussed in our previous video
  • The EURUSD with a false bearish breakout of a neckline, that’s super bullish
  • The USDCAD goes down as expected. Shooting star on a weekly chart is no joke
  • Indices push higher, same thing, different day

U.S Dollar Bulls Devastated By Dovish Remarks From Federal Reserve Bank

During Thursday morning’s Asian session, safe-haven currency was down, continuing to hover around a two-week low. U.S. Federal Reserve Chairman Jerome Powell has insisted that there will be no rate hikes in the near future, weighing down the U.S. currency.

The Dollar Index is a measure of the greenback against a basket of other currencies and it was 0.17% lower at 92.15 index points when this report was drafted after recording its third straight plunge the previous sessions.

The precious metal gained over 0.8% yesterday and is currently trading around $1,818 per ounce after reaching its highest level since July 20, according to market reports.

Dollar bulls remain under pressure of around 92.25 index points during Thursday’s Asian session. In spite of the Fed’s refusal to discuss tapering, the greenback gauge has shown a three-day decline since Wednesday.

Recent news concerning the Senate’s decision on Joe Biden’s infrastructure spending bill has affected DXY Bulls in staying firm.

Despite the dollar’s gains for about a month, it lost some traction ahead of the Fed meeting on Wednesday. Chairman Powell’s comments about rate increases being “a ways off” exacerbated the declines.

It should be noted that following the FOMC announcement, the US Fed Funds Future indicates the market fully expects 25 basis points of tightening by March 2023. However, US dollar bulls should be reminded of their recent dovish reaction.

Moreover, the Fed’s head warned that the job market still had “some ground to cover” before the central bank began reducing its assets, though he did not specify an exact timeline.

The Fed chief also downplayed the threat of COVID-19, and its Delta variant, to the U.S. economic recovery from the continuous spread of COVID-19, and its variants worldwide.

Fed Nothingburger, Dollar Lower, Focus on GDP, PCE

It was a rather pedestrian FOMC Statement day on Wednesday. There is GDP data incoming, and the widely Fed-followed Core PCE Price Index data comes out on Friday. What can we take away from the FOMC Statement and press conference?

Rates unchanged. No rush to raise interest rates. Inflation should persist.

No surprises here.

However, there was some notable price action in the US Dollar Index during Wednesday’s session. The US Dollar Index initially rose on the FOMC statement at 2:00 PM. During the press conference, the USD fell as Fed Chair Jerome Powell mentioned that inflation should persist for several months. It is noteworthy price action and can be a forward-looking indicator for the direction of other asset prices.

First, let’s take a look at the daily chart of the $DXY:

Figure 1 – US Dollar Index November 1, 2020 – July 28, 2021, Daily Candles Source stockcharts.com

As we know, the US Dollar has been in a longer-term downtrend. The repeating pattern has been lower daily highs. Short the dollar was a heavily crowded trade recently that we examined and discussed. After reaching oversold conditions, a quick bounce occurred. However, with no rush to raise interest rates and Fed open market operations continuing, the $DXY could try the downside once again. This downward move could impact the prices of commodities even further to the upside. There is a key Fibonacci level that was not quite reached in the index on its last downside attempt (near $88.41).

Figure 2 – US Dollar Index July 28, 2021 – July 28, 2021, 1-minute Candles Source stooq.com

I find value in this type of analysis; when you can take a daily/longer-term trend/outlook and then take an intraday peek on a day such as a Fed day. I would have guessed that the market would be factoring in further inflation already. However, based on the $DXY behavior intraday, it appears that the US Dollar may want to get set to go and retest the recent low near $89.50.

GDP Data, Core PCE

On Thursday morning, we are getting GDP (q/q), and on Friday morning we will get the Core PCE data. GDP can be a market mover, and the Fed does like to monitor the PCE data for inflation signals.

As the US Dollar may weaken some, a place to park some cash could be in the UDN – Invesco DB US Index Bearish ETF. I wouldn’t expect any home runs here; the ETF is unleveraged, but a 2 – 3% pop could be in the cards here if the $DXY wants to test its recent lows.

Figure 3 – Invesco DB US Dollar Index Bearish Fund – September 4, 2020 – July 28, 2021, Daily Candles Source stockcharts.com

UDN is doing its job rather well and is inversely tracking the US Dollar Index at an efficient rate. Other traders could use the $DXY product on ICE if their accounts are enabled for it. ICE passes through the monthly fee for its products to retail traders (somewhere in the neighborhood of $110 per month) to trade these products and receive quotes.

So, using UDN can give traders some pure exposure to a dollar decline. We will be eyeballing the $21.48 – $21.64 levels as potential TP targets for now. Levels and sentiment can change quickly, so stay tuned!

Now, for our premium subscribers, let’s review the other markets that we are covering. Not a Premium subscriber yet? Go Premium and receive my Stock Trading Alerts that include the full analysis and key price levels.

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For a look at all of today’s economic events, check out our economic calendar.

Rafael Zorabedian
Stock Trading Strategist

Sunshine Profits: Effective Investment through Diligence & Care

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EUR/USD Daily Forecast – Test Of Resistance At 1.1860

U.S. Dollar Is Losing Ground Against Euro

EUR/USD is currently trying to settle above the resistance at 1.1860 while the U.S. dollar is moving lower against a broad basket of currencies.

The U.S. Dollar Index is testing the nearest support level which is located at 92.15. A move below this level will push the U.S. Dollar Index towards the support at 92 which will be bullish for EUR/USD.

Today, foreign exchange market traders will have a chance to take a look at the final reading of Euro Area Consumer Confidence report. Analysts expect that Euro Area Consumer Confidence decreased from -3.3 in June to -4.4 in July.

Euro Area Industrial Sentiment is projected to improve from 12.7 in June to 13 in July while Euro Area Services Sentiment is expected to grow from 17.9 to 19.9.

In the U.S., traders will focus on the second-quarter GDP Growth Rate report which is expected to show that GDP grew by 8.5% quarter-over-quarter. Initial Jobless Claims are projected to decline from 419,000 to 380,000 while Continuing Jobless Claims are expected to decrease from 3.24 million to 3.2 million.

U.S. will also provide Pending Home Sales report which is expected to show that Pending Home Sales grew by 0.3% month-over-month in June.

It remains to be seen whether EUR/USD will be sensitive to economic reports today or traders will stay focused on yesterday’s commentary from the Fed.

Technical Analysis

eur usd july 29 2021

EUR/USD managed to settle above the resistance at the 20 EMA at 1.1830 and is testing the next resistance level at 1.1860. If this test is successful, it will move towards the next resistance at 1.1880.

A move above 1.1880 will push EUR/USD towards the resistance at the 50 EMA at 1.1900. In case EUR/USD gets above this level, it will move towards the next resistance level at 1.1925.

On the support side, the previous resistance at the 20 EMA at 1.1830 will serve as the first support level for EUR/USD. A move below this level will push EUR/USD towards the support at 1.1800.

If EUR/USD declines below 1.1800, it will head towards the next support at 1.1775. A successful test of this level will open the way to the test of the next support at 1.1750.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Daily Forecast – U.S. Dollar Declines As Fed Remains Dovish

British Pound Is Moving Higher Against U.S. Dollar

GBP/USD is moving towards the resistance level at 1.3950 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index is currently trying to settle below the support level at 92.15. In case this attempt is successful, the U.S. Dollar Index will get to the test of the next support at the 92 level which will be bullish for GBP/USD.

Yesterday, Fed Chair Jerome Powell reiterated his dovish message and stated that inflation pressures remained transitory. The Fed maintains its current asset purchase program, although some Fed members have started to discuss whether the Fed should reduce the purchases mortgage-backed securities before it reduces the purchases of Treasuries. The Fed will likely provide additional details about such discussions in Jackson Hole at the end of August.

The U.S. dollar lost ground against a broad basket of currencies after Fed’s comments as traders expected to see more clarity on the future reduction of asset purchase program. At this point, it looks that the Fed will not begin to reduce asset purchases before 2022, which is rather bearish for the American currency.

Technical Analysis

gbp usd july 29 2021

GBP/USD managed to get above the resistance at 1.3920 and continues its upside move. The next resistance level for GBP/USD is located at 1.3950. In case GBP/USD settles above this level, it will move towards the resistance at 1.3980.

A successful test of the resistance at 1.3980 will push GBP/USD towards the resistance at 1.4000. If GBP/USD manages to settle above this level, it will head towards the next resistance level at 1.4020.

On the support side, the previous resistance at 1.3920 will serve as the first support level for GBP/USD. In case GBP/USD declines below 1.3920, it will move towards the next support at 1.3900.

A move below 1.3900 will push GBP/USD towards the support which is located at the 50 EMA at 1.3880. A successful test of the support at the 50 EMA will push GBP/USD towards the support at 1.3865.

For a look at all of today’s economic events, check out our economic calendar.

Powell Presses Pause on Dollar’s Rally; Sterling Surging

By Tom Westbrook

About a month of dollar gains had already lost momentum leading in to Wednesday’s Federal Reserve meeting and Chairman Jerome Powell’s remark that rate increases were “a ways away” was enough to tip it a touch lower still.

The euro edged to a two-week high of $1.1860 and the Australian and New Zealand dollars clung to gains made in a bounce on Wednesday. Sterling, which has been surging on optimism over the re-opening of the British economy, touched a one-month high of $1.3940.

The dollar index was softer for a fourth straight session, last trading at a two-week low of 92.110, while the Chinese yuan edged up to stand as high as 6.4691 per dollar in onshore trade and has now regained ground lost in tandem with a regulatory-driven plunge in Chinese equities on Tuesday. [CNY/]

“In the short-term, there’s been a reduction of taper fears, and that’s why we’ve seen the dollar heading lower,” said Jeffrey Halley, senior analyst at brokerage OANDA in Jakarta.

“Improving risk sentiment should be associated with a weaker dollar,” added National Australia Bank’s head of FX strategy Ray Attrill.

A Bloomberg report on a call China’s securities regulator held with banks and brokers to soothe nerves following heavy equities selling also helped sentiment and riskier currencies.

A CNBC report saying China Securities Regulatory Commission told brokerages on the call that China would continue to allow companies to list in the United States offered further support, as did solid rises in Chinese stock indexes on Thursday.

The Australian dollar was last up about 0.1% at $0.7379, capped by concerns over a lengthening lockdown in Sydney that is likely to drag on the national economy.

The New Zealand dollar rose 0.2% to $0.6971.

SURGING STERLING

Recent resilience in safe-haven currencies such as the Japanese yen and Swiss franc suggests plenty of caution remains in currency markets as global coronavirus cases rise, yet at the same time sterling’s gains reflect optimism that the British economy can be re-opened as vaccinations progress.

The British currency is the biggest G10 gainer on the dollar this week. It climbed some 2.6% from a five-month low it touched last week to the one-month top it hit on Thursday.

The pound notched up its highest levels in almost four months on the euro on Wednesday. It has also made strong gains on the yen and especially on the Australian dollar, against which it is up 3.6% from low touched in early July.

Though experts and Prime Minister Boris Johnson have cautioned it is too early to draw conclusions, England’s re-opening last week has yet to spark a surge in cases or in hospitalisations.

“At the moment, the UK’s (COVID) position is pretty good and I do think that’s had an impact,” said NAB’s Attrill.

Later on Thursday, traders will be looking at German labour and inflation data, European sentiment surveys and second-quarter U.S. GDP – where the consensus is for 8.5% annualised growth, albeit from a wide range of forecasts.

(Reporting by Tom Westbrook; Editing by Edwina Gibbs)

Economic Data from the Eurozone and the U.S Put the EUR and the Dollar in the Spotlight

Earlier in the Day:

It was another relatively quiet start to the day on the economic calendar this morning. The Kiwi Dollar was in action in the early part of the day.

For the Kiwi Dollar

Business confidence was in focus this morning.

In July, the ANZ Business Confidence Index fell from -0.6 to -3.8%. Economists had forecast an increased to 1.2%.

According to the latest ANZ Report,

  • While business confidence was down, firms’ own activity rose by 5 points to +32%.
  • Investment intentions increased by 7 points to 25.5%, while employment intentions eased by 1 point.
  • Cost expectations rose by 5 points to a net 86.2%. A net 62.8% of respondents intend to raise their prices, up 6 points. General inflation expectations rose by 19 bps to 2.41%.
  • Profit expectations increased by 2 points to 5.8%, however.
  • Export intentions rose by a modest 1 point to 13.4%.

The Kiwi Dollar moved from $0.69584 to $0.69545 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.07% to $0.6954.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.16% to ¥109.730 against the U.S Dollar, while the Aussie Dollar was down by 0.15% to $0.7365.

The Day Ahead

For the EUR

It’s a relatively busy day ahead on the economic data front, with the German economy back in the spotlight.

Unemployment and inflation figures will be in focus later today.  Expect plenty of interest in the numbers, with market sensitivity to inflation lingering despite the ECB’s latest shift in its price objective.

At the time of writing, the EUR was up by 0.03% to $1.1848.

For the Pound

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats to provide the Pound with direction.

At the time of writing, the Pound was up by 0.06% to $1.3911.

Across the Pond

It’s a busy day ahead on the economic calendar.

1st estimate GDP numbers for the 2nd quarter and weekly jobless claims figures will be in focus later today.

We can expect plenty of interest in today’s numbers. Expect any sharp increase in jobless claims to overshadow positive GDP numbers, however.

At the time of writing, the U.S Dollar Spot Index was down by 0.09% to 92.235.

For the Loonie

It’s a quiet day on the economic calendar, with no material stats from Canada to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of market risk sentiment on the day.

At the time of writing, the Loonie was up by 0.05% to C$1.2522 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Dollar Index (DX) Futures Technical Analysis – Bullish Over 92.495, Bearish Under 92.350

The U.S. Dollar is trading flat against a basket of major currencies in a listless trade as investors stayed on the sidelines and waited for the outcome of a two-day Federal Reserve meeting.

All eyes will be on a statement from the Federal Open Market Policy Committee, due at 18:00 GMT, with a news conference by Chairman Jerome Powell expected half an hour later.

At 17:42 GMT, September U.S. Dollar Index futures are trading 92.475, up 0.039 or +0.04%.

According to Reuters, investors are waiting to hear about the Fed’s assessment of economic growth, inflation risks, and the impact on monetary policy, especially regarding when the Fed will start tightening policy by reducing its purchases of government bonds.

Some traders don’t expect the Fed to change its accommodative course in a major way at this meeting, but most agree that any sign that the Fed will act sooner than expected on tapering its bond purchase stimulus or raising interest rates could rattle investors. Some investors said concerns that the fast-spreading Delta coronavirus variant may scupper economic growth is another reason for the Fed to stand pat, for now.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum has shifted to the downside. A trade through 92.075 and 91.995 will change the main trend to down. A move through 93.195 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the momentum. The minor trend will change to up on a trade through 93.04.

The minor range is 93.195 to 92.320. Its 50% level or pivot at 92.760 is resistance.

On the downside, the first support area is a pair of retracement levels at 92.495 and 92.350. Additional support is another pair of retracement levels at 91.950 to 91.850.

Daily Swing Chart Technical Forecast

The direction of the September U.S. Dollar Index into the close on Wednesday is likely to be determined by trader reaction to 92.495 and 92.350.

Bullish Scenario

A sustained move over 92.495 will indicate the presence of buyer. This could trigger a quick move into the pivot at 92.760. This price is a potential trigger point for an acceleration to the upside with the next potential targets a pair of main tops at 93.195 and 93.430.

Bearish Scenario

A sustained move under 92.350 will signal the presence of sellers. If this generates enough downside momentum then look for a potential plunge into a cluster of levels at 92.075, 91.995, 91.950 and 91.850.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – Resistance At 1.2590 Stays Strong

Canadian Dollar Moves Higher Against U.S. Dollar

USD/CAD failed to settle above the resistance at 1.2590 and pulled back while the U.S. dollar gained some ground against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to get above 92.70 but lost momentum and pulled back towards 92.60. The nearest significant resistance level for the U.S. Dollar Index is located at 92.80. In case the U.S. Dollar Index gets to the test of this level, USD/CAD will get more support.

Canada has recently reported that Inflation Rate increased by 0.3% month-over-month in June compared to analyst consensus which called for growth of 0.4%. On a year-over-year basis, Inflation Rate grew by 3.1% compared to analyst consensus of 3.2%. Core Inflation Rate increased by 2.7% year-over-year.

Canada’s inflation was a bit lower than expected, but foreign exchange market traders will stay focused on the main event of the day. Soon, the Fed will announce its Interest Rate Decision and provide additional commentary. Any talk about potential adjustment of the asset purchase program may provide material support to the American currency.

Technical Analysis

usd cad july 28 2021

USD to CAD did not manage to settle above the resistance level at 1.2590 and is moving towards the nearest support level at 1.2560. In case USD to CAD manages to settle below this level, it will head towards the support which is located at the 20 EMA near 1.2540.

A move below the 20 EMA will open the way to the test of the support at 1.2500. If USD to CAD gets below the support at 1.2500, it will head towards the next support level at 1.2485.

On the upside, the nearest resistance level for USD to CAD is still located at 1.2590. A successful test of this level will push USD to CAD towards the next resistance at 1.2625.

In case USD to CAD manages to settle above 1.2625, it will head towards the next resistance at 1.2650. A move above the resistance at 1.2650 will open the way to the test of the resistance at 1.2685.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD: Loonie Gains on Rising Oil Prices; Fed Decision in Focus

Canada’s dollar gained against the U.S. counterpart on Wednesday as stocks gained and oil prices recovered, but currency traders are awaiting the Fed decision due later in the day, as an unexpected hawkish announcement would boost the greenback.

The dollar to loonie conversion fell to 1.2556 against the U.S. currency, down from Tuesday’s close of 1.26. The Canadian dollar had lost about 3% in June – posting the biggest monthly drop since March 2020, the early days of the pandemic, and weakened over 1.51% so far this month.

Canada is the world’s fourth-largest exporter of oil, which edged higher on hopes of a bullish inventory report. Increasing oil prices result in higher U.S. dollar earnings for Canadian exporters, which results in a stronger loonie. U.S. West Texas Intermediate (WTI) crude futures traded higher by 0.52 cents, or 0.74%, to $72.16 a barrel.

But the gains were capped by Canada’s June inflation data, which slowed to 3.1% from 3.6% in May.

“Following the BoC’s taper at the July meeting, Citi Research’s base case is for another tapering in October, with net-zero purchases by year-end and BoC to commence rate hikes in 2022. USDCAD is trading below a good resistance range at 1.2647-53 (March and April 2021 highs). If this continues, the next support level to watch will be a rising trend line currently standing at 1.2457,” noted analysts at Citi.

“Both fundamentals and technical therefore continue to support the “buy CAD on dips” sentiment not only versus USD but also against low yielders (EUR, JPY and CHF) and AUD (that continues to face extended lockdown risks).”

The dollar index, a measurement of the dollar’s value relative to six foreign currencies, was trading 0.23% higher at 92.642 – not far from this year’s high of 93.437.

The U.S. Federal Reserve is due to make an interest rate decision on Wednesday. Traders remain cautious ahead of the policy decision as any unexpected hawkish surprise would lift the greenback. However, most economists believe this to be a non-event.

“We see a meaningful possibility that today’s Fed announcement will be a non-event, with the spread of the Delta Variant offering a reason for the FOMC to postpone more serious tapering communication until Jackson Hole. If anything, the balance of risks for the dollar appears tilted to the upside, also thanks to the China-related risk-off environment,” noted analysts at ING.

However, the risk that the world’s dominant reserve currency, the USD, is expected to rise further over the coming year, largely driven by the Fed’s expectation of two rate hikes in 2023. A strengthening dollar and growing risk that the Federal Reserve would tighten its monetary policy earlier than expected would push the USD to CAD pair higher.

Dollar Edges Higher with All Eyes on The Fed

By Saqib Iqbal Ahmed and Tom Wilson

The dollar index, which measures the greenback against a basket of six currencies, was 0.236% higher at 92.68.

The dollar has enjoyed a monthlong rally, with the dollar index up about 2.3% since the Fed’s June meeting, after a hawkish shift from the U.S. central bank.

Graphic: The Fed and the dollar: https://fingfx.thomsonreuters.com/gfx/mkt/gkvlgmbgypb/Pasted%20image%201627479604445.png

Investors are eager to see whether the Fed will provide any clues on the timing of the tapering of its asset purchases.

“On days like this there is always a little bit of trepidation,” said Minh Trang, senior FX trader at Silicon Valley Bank.

“It’s kind of slow play till the news comes out,” he said.

While foreign exchange analysts said the chances were high that the Fed would not shift policy, they were curious to hear more about the bank’s thinking on the recent spike in inflation and on whether it thinks growing COVID-19 cases could derail the global recovery.

The Fed publishes a statement at 2 p.m. EDT (1800 GMT), followed by a news conference held by Chair Jerome Powell at 2:30 p.m. (1830 GMT).

“We go into the meeting with positive dollar bias,” said Adam Cole, chief currency strategist at RBC Capital Markets.

“The hurdle is quite low for the Fed to be perceived to be erring on the hawkish side, and that’s my bias going in.”

The Chinese yuan pulled away from three-month lows hit on Tuesday, when it saw its biggest daily losses since October, after the country’s stock market stabilized following a bruising couple of days.

The yuan’s bounce was modest, however, and the risk-sensitive Australian and New Zealand dollars were both subdued as sentiment remained fragile.

Elsewhere, the British pound was little changed on the day, remaining close to the near-two-week high touched on Tuesday, with analysts attributing its firm tone to COVID-19 cases in Britain declining over the last seven days.

Bitcoin was about flat on the day, two days after it broke above $40,000 for the first time in about six weeks, short sellers bailed out and traders drew confidence from recent positive comments about the cryptocurrency by high-profile investors.

(Reporting by Saqib Iqbal Ahmed in New York and Tom Wilson in London; Additional Reporting by Tom Westbrook in Singapore; Editing by Ana Nicolaci da Costa, Catherine Evans and Jonathan Oatis)

Silver Price Daily Forecast – Silver Tries To Rebound After Sell-Off

Silver Gains Some Ground Ahead Of Fed Interest Rate Decision

Silver is currently trying to settle back above the resistance level at $24.70 while the U.S. dollar is moving higher against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get above 92.60 and continues to move towards the resistance at 92.80 ahead of Fed Interest Rate Decision. In case the U.S. Dollar Index manages to get back above the resistance at 92.80, it will move towards the next resistance level at 93.10 which will be bearish for silver and gold price today.

Meanwhile, gold continues to trade near the key support level at $1800. In case gold finally settles below $1800, it will gain downside momentum and get to the test of the next support level at $1775 which will be bearish for silver and other precious metals.

Gold/silver ratio faced resistance at the 73 level and pulled back. In case gold/silver ratio gets back above the 73 level, it will continue its upside move and head towards the recent highs near 73.35 which will be bearish for silver.

Technical Analysis

silver july 28 2021

Silver received support at $24.50 and is trying to settle back above $24.70. In case this attempt is successful, silver will move towards the resistance level at $25.00.

A move above this level will push silver towards the next resistance level at $25.30. In case silver manages to settle above $25.30, it will move towards the resistance which is located near the 20 EMA at $25.50.

On the support side, silver needs to settle below $24.70 to have another chance to test the support level at $24.50. If silver declines below this level, it will move towards the next support at $24.20. RSI remains in the moderate territory so there is enough room to develop additional downside momentum in case the right catalysts emerge.

If silver settles below $24.20, it will move towards the support at $24.00. A successful test of this level will open the way to the test of the support at March lows at $23.80.

For a look at all of today’s economic events, check out our economic calendar.

USDX: More Sideways Trading Ahead?

Yesterday’s (Jul. 27) supposedly big news was the breakdown below the neck level of the inverse head-and-shoulders pattern in the USD Index. Invalidations of breakouts are bearish, and what’s bearish for the USDX is usually bullish for gold, silver, and mining stocks. So, what happened? And what didn’t happen?

What happened was that the USD Index moved a bit below the declining neckline based on the previous intraday highs.

What didn’t happen was the move below the declining neckline based on the previous highs in terms of daily closing prices (dashed line).

So, was the breakout really invalidated? Not necessarily, especially that the USDX is moving back up in today’s pre-market trading (at least at the moment of writing these words).

Moreover, while the USD Index moved lower yesterday, gold refused to rally.

To be precise, it did move higher, but only by $0.60, so it generally ignored the USD’s movement.

Consequently, yesterday’s session might have seemed to be a game-changer at first sight, but it seems much more likely that it wasn’t one. In my view, yesterday’s price movement was the continuation of the back-and-forth trading that’s analogous to what we saw in the first half of June. Gold was moving back and forth in a boring manner then too. The boredom was over quite quickly and a big short-term slide followed – I think the same is likely to happen shortly.

Gold Miners’ Aid

Mining stocks’ performance also supports this scenario.

If it was the beginning of another sizable move higher in the PMs and miners, the latter would be likely to show strength before gold. And that’s not taking place.

Senior gold miners were practically flat yesterday, just as gold was – that is, only slightly higher. On the other hand, junior gold miners ended the session slightly lower – very close to their previous 2021 lows.

Junior miners (the GDXJ ETF) haven’t invalidated the breakdown below the neck level of the bearish head and shoulders formation. Consequently, the very bearish implications of the breakdown remain intact.

All in all, the precious metals sector seems poised for another move lower, quite likely to the previous yearly lows in the case of gold and well below the previous 2021 lows in the case of the mining stocks. Yesterday’s decline in the USD index doesn’t change that. To clarify, the above-mentioned targets will most likely be just interim stops within an even bigger decline that will get us to the ultimate buying opportunity for the PMs and miners later this year.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Fed Day

The China-inspired losses saw the MSCI Asia Pacific Index fall to new lows for the year today, though Hong Kong’s Hang Seng posted a 1.3% gain. Europe’s Dow Jones Stoxx 600 is posting the first gain of the week, led by information technology, real estate, and consumer discretionary. Despite strong bank earnings, financials are matching the market, not outperforming it. US futures are oscillating around little changed levels.

The US 10-year benchmark yield is firm at 1.25%, while European yields are mostly slightly softer but sufficient to take German, French, Dutch, and Greek yields to new 3-4 month lows. The Antipodean currencies and yen are the heaviest against the US dollar, with the Canadian dollar the only major currency gaining on the greenback through the European morning. Emerging market currencies are mixed, leaving the JP Morgan EM FX index little changed.

The Chinese yuan gained for the first time in five sessions. API estimated a 4.7 mln barrel drop in US oil stocks and a large (6.2 mln barrel) drawdown in gasoline inventories, which, if confirmed, would be the largest since March. September WTI is around 1% higher today. Gold continues to move broadly sideways and is straddling the $1800-level today.

Iron ore and steel rebar futures fell in Shanghai, while copper is recovering from yesterday’s decline, which snapped a five-day advance. September lumber dropped 6.7% yesterday to bring this week’s decline to about 8.3% after jumping 18% last week on Canada’s wildfires. The CRB Index fell 0.6% yesterday to end is five-day, 6.8% advance.

Asia Pacific

Investors are continuing to try to make sense of Beijing’s aggressive moves that appear to be a broad offensive that can only result in a slowing if not reversing of past efforts to integrate into global capital markets. The ultimate goal is not clear. Beijing had appeared to be willing to use the capital inflows to ease restrictions on capital outflows. Some even speculated that this would gradually allow the yuan to be convertible.

Although we disagreed, many observers see that introducing the digital yuan as early as next year’s Olympics would challenge the US dollar’s role. The recent actions appear to deal a blow to such speculation. Lastly, there is some thought that the PBOC could ease policy again (following the recent cut in reserve requirements) to lend support to the stock market, if needed.

Australia’s Q2 CPI came in slightly above forecasts with a 0.8% rise after 0.6% in Q1. The year-over-year pace jumped to 3.8% from 1.1%. The underlying measures were as expected, with a 1.6% year rise (from 1.1%) for the trimmed mean and a 1.7% (from 1.3%) weighted median. Still, the data is unlikely to stand in the way of the RBA announcing increased bond purchases at next week’s meeting (August 3). The lockdown in Sydney and social restrictions elsewhere are threatening the economy.

Keep an eye on Japanese weekly portfolio flows that are released first thing tomorrow in Tokyo. In the previous week, ending July 9, foreigners appear to have bought a recorded amount of Japanese bonds (JPY2.57 trillion or ~$23.3 bln). To put the figure in perspective, the previous four-week average was around JPY546 bln. For their part, Japanese investors have sold foreign bonds for the past three weeks, and the average weekly sale of JPY804 bln is the most since early March. On the other hand, equity portfolio flows have been minor.

The dollar is consolidating in about a quarter of a yen below JPY110.00 so far today. The greenback has been recovering since dipping briefly below JPY109.60 near midday in NY yesterday. A move above JPY110.00 could see JPY110.20, but the subdued session will likely continue until the FOMC statement. The Australian dollar is stagnant. It remains within the range set on Monday (`$0.7330-$0.7390). There is an option for A$710 mln at $0.7390 that expires today and another for about A$515 mln at $0.7400 that expires tomorrow.

The dollar spiked to CNY6.5125 yesterday, its highest level in three months, and broke out of the CNY6.45-CNY6.50 month-old range. However, it was pushed back into the range today as the yuan rose for the first time in five sessions. The PBOC set the dollar’s reference rate at CNY6.4929, slightly lower than the median expectation picked up in Bloomberg’s forecast (CNY6.4935).

Europe

The UK and the EU are still at odds over the Northern Ireland Protocol. However, the EC moved to de-escalate the situation. Rather than push forward with its threat of imminent legal action as the end of the month should mark a new phase of enforcement, it appears to have granted a grace period of the summer to find an amicable solution.

Germany’s August GfK consumer confidence survey was unexpectedly weak. Rather than rising to 1.0 as economists projected, it remained at -0.3. The disastrous floods seem to be the main culprit. Tomorrow, Germany reports July CPI figures and employment data. The EU harmonized measure of CPI is expected to rise to 2.9% from 2.1% in June. Unemployment may have ticked down to 5.8% from 5.9%. It was at 5.0% steadily in H2 19.

The week’s highlight for the eurozone comes on Friday with the aggregate CPI (there seems to be upside risks to the 2.0% median forecast in Bloomberg’s survey) and the first look at Q2 GDP.

In the UK, Nationwide reported its house price index fell 0.5% in July. It is the first decline since March and the largest fall since last June. The year-over-year rate moderated to 10.5% from 13.4% in June. A tax break is winding down. On July 1, the stamp-duty threshold on new purchases was halved to GBP250k, adding GBP12.5k to the average home bought in London. Starting October 1, the threshold will return to GBP125k.

The euro is trading quietly in the upper end of yesterday’s range that saw it reach $1.1840, its highest level since mid-July. It has held above $1.18 so far today, and if sustained, will be the first session since July 12 that it has not traded with a $1.17-handle. There is a billion-euro option at $1.18 that expires today and another at $1.1820, and a third at $1.1850.

Tomorrow, there is a 1.36 bln euro option struck at $1.1850 that will also expire. It suggests that the area will likely be sticky. Sterling is firm but holding below $1.39 that it approached yesterday. An option for almost GBP400 mln is struck at $1.3925 that expires today. Tomorrow there is an option for almost GBP410 mln at $1.3900 that also will be cut. Initial support is seen near $1.3860 and then $1.3820.

America

Following Monday’s unexpected decline in June’s new home sales (-6.6%) and a downward revision to the May series (-7.8% rather than -5.9%), the US reported weaker than expected June durable goods orders, mitigated in part by the upward revisions to the May data. Separately, house price increases accelerated in May.

Today’s reports of the advance goods trade balance and retail and wholesale inventories will give economists the last opportunity to adjust the Q2 GDP forecasts ahead of tomorrow’s report. The median forecast in Bloomberg’s survey sees 8.5% annualized growth in Q2 after a 6.4% pace in Q1. The price deflator is expected to accelerate to 5.4% from 4.3%.

The outcome of the FOMC meeting is center stage today. No change in policy is expected, though some members seem to want to adjust the asset purchases immediately with special attention to the mortgage-backed securities. This seems unlikely. However, Powell is unlikely to push against expectations that an announcement could be made at the next FOMC meeting in September.

By pledging to give the market a clear advance warning, it would seem to need to say something relatively soon to keep its options open for an adjustment in the pace and possibly the composition of its purchase by the end of the year. Powell could deter dissents by striking a compromise by replacing the agency bonds purchases with more Treasuries, but this too seems unlikely. The FOMC statement is unlikely to deviate much from the last one, and the Fed is unlikely to see the rising Delta covid cases as substantially impacting its economic outlook.

Canada reports June CPI figures. The year-over-year rate is expected to ease (3.2% from 3.6%) for the first time this year. Canada has three core measures, two of which may have also softened (median and trim iterations). At the end of the week, Canada will report May’s monthly GDP. It is expected to have matched April’s 0.3% contraction, but the data seems dated.

Mexico’s June trade surplus was much smaller than expected ($762 mln vs. median Bloomberg survey forecast for $2 bln). Partly, it appears that domestic demand is improving, and this will likely be seen in the Q2 GDP report due at the end of the week. The median forecast anticipated a 1.8% expansion in the quarter after a 0.8% pace in Q1.

The US dollar is encountering selling pressure near CAD1.26 for the fifth consecutive session. Key support is seen near CAD1.2525, though there is an option for almost $390 mln at CAD1.2550 that expires today. Momentum indicators like the MACD and Slow Stochastic are trending lower, and the greenback’s recovery from the multi-year low set on June 1 near CAD1.20 looks over or nearly so.

The US dollar is trading near seven-day lows against the Mexican peso (~MXN19.9330). Chart support is seen in the MXN19.80-MXN19.82 band. Nearby resistance is pegged near MXN20.03.

This article was written by Marc Chandler, MarctoMarket.