USD/CAD Daily Forecast – Canadian Dollar Declines Amid Sell-Off In Commodities

U.S. Dollar Continues To Gain Ground Against Canadian Dollar

USD/CAD is currently trying to settle above 1.2350 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is currently testing the resistance at 91.80. In case this test is successful, the U.S. Dollar Index will move towards the 92 level which will be bullish for USD/CAD.

Today, U.S. reported that Initial Jobless Claims increased from 375,000 (revised from 376,000) to 412,000 compared to analyst consensus of 359,000. Continuing Jobless Claims remained unchanged at 3.52 million compared to analyst consensus of 3.43 million.

In Canada, ADP Employment Change report indicated that employment increased by 101,600 jobs in May compared to analyst forecast of 250,000.

The reports had little impact on currency dynamics on the foreign exchange market as traders focused on the new data from the Fed which showed that the Fed expected two rate hikes in 2023.

Canadian dollar received a double blow from the Fed and the sell-off in commodity markets, so USD/CAD managed to get from 1.2200 to 1.2350 in just two trading sessions. If the sell-off in commodity markets continues, Canadian dollar and other commodity-related currencies will move lower.

Technical Analysis

usd cad june 17 2021

USD to CAD managed to get above the resistance at 1.2325 and is trying to settle above the next resistance level at 1.2350. RSI has recently moved into the overbought territory, but USD to CAD may gain more upside momentum in case the right catalysts emerge.

If USD to CAD manages to settle above the resistance at 1.2350, it will head towards the next resistance at 1.2385. A successful test of this level will open the way to the test of the resistance at 1.2420. If USD to CAD gets above this level, it will head towards the resistance at 1.2450.

On the support side, the previous resistance at 1.2325 will serve as the first support level for USD to CAD. In case USD to CAD manages to settle below this level, it will head towards the next support level which is located at 1.2300.

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

American Dollar Retaliates

Yesterday’s FOMC brought havoc to the market. The vast majority of the instruments quoted against the USD are going down. Stocks are mixed…with this amount of money on the market that is indeed a great occasion for a correction but definitely not a major sign for a reversal.

The SP500 is still safely above the main uptrend line.

The Dow Jones on the other hand broke the major uptrend line but I do not think it will be permanent.

The DAX is doing great, it’s in a channel up formation above the major support.

Gold dropped like a rock. It’s back inside the flag and the sentiment is negative.

The USDCAD climbed higher with a sweet long-term buy signal.

The EURCHF is fighting for a bullish engulfing on the weekly chart. That is possibly a great occasion to go long.

The AUDUSD broke the lower line of the triangle is aiming lower.

The GBPUSD broke the crucial horizontal support and long-term up trendline, it’s is an invitation to go short.

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

Economic Data Puts the EUR and the Greenback in the Spotlight

Earlier in the Day:

It was a busier start to the day on the economic calendar this morning. The Kiwi Dollar and the Aussie Dollar were in action this morning.

For the Kiwi Dollar

GDP numbers were in focus in the early hours.

In the 1st quarter, the economy grew by 1.6%, quarter-on-quarter, coming in ahead of a forecasted 0.5% expansion. In the 4th quarter of last year, the economy had contracted by 1.0%.

According to NZ Stats, the services industry, which accounts for two thirds of the economy, delivered the largest contribution.

The Kiwi Dollar moved from $0.70551 to $0.70753 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.61% to $0.7094.

For the Aussie Dollar

Employment figures were in focus.

In May, employment increased by 115.2k in May, reversing a 30.6k decline from April. Economists had forecast a more modest 30.0k rise.

Full employment increased by 97.5k following a 33.8k rise in April.

As a result of the pickup in hiring, the unemployment rate fell from 5.5% to 5.1%. Economists had forecast for the unemployment rate to hold steady at 5.5%.

According to the ABS,

  • The number of unemployed fell by 53k to 701k.
  • While the unemployment rate fell to 5.1%, the participation rate increased 0.3 percentage points to 66.2%. This was close to a historical high of 66.3% seen back in March 2021.

The Aussie Dollar moved from $0.76269 to $0.76290 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.32% to $0.7634.

Elsewhere

Through the early hours, the Japanese Yen was up by 0.05% to ¥110.65 against the U.S Dollar.

The Day Ahead

For the EUR

It’s a relatively quiet day ahead on the economic data front. Finalized inflation figures for the Eurozone are due out later today.

Stats in line with prelim numbers should deliver EUR support though the upside will likely be limited. The ECB continues to see inflation as transitory, removing near-term influence on monetary policy.

At the time of writing, the EUR was up by 0.03% to $1.9999.

For the Pound

It’s a particularly quiet day ahead on the economic calendar.

There are no material stats to provide the Pound with direction.

Updates on government plans to ease remaining restrictions will remain a key driver.

At the time of writing, the Pound was up by 0.04% to $1.3993.

Across the Pond

It’s a relatively busy day ahead on the economic calendar. Key stats include Philly FED Manufacturing numbers and the weekly jobless claim figures.

Barring particularly dire manufacturing numbers expect the weekly initial jobless claims to have the greatest impact on the Dollar.

Away from the economic calendar, FOMC member chatter and news from Capitol Hill will also need monitoring.

At the time of writing, the Dollar Spot Index was up by 0.29% to 91.396.

For the Loonie

It’s a relatively quiet day ahead on the economic data front. Foreign securities purchases for April are due out later today.

We don’t expect the numbers to influence, however, leaving the Loonie in the hands of market risk sentiment on the day.

At the time of writing, the Loonie was down by 0.01% to C$1.2278 against the U.S Dollar.

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

USD/CAD Daily Forecast – Test Of Support At 1.2170

Canadian Dollar Gains Ground Against U.S. Dollar

USD/CAD is currently trying to get back below the support at 1.2170 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index has made several attempts to settle above the resistance at the 50 EMA at 90.60 in recent trading sessions, but these attempts yielded no results. In case the U.S. Dollar Index gets above this level, it will head towards the resistance at 90.90 which will be bullish for USD/CAD.

Today, U.S. reported that Building Permits declined by 3% month-over-month in May while Housing Starts grew by 3.6%. The foreign exchange market has mostly ignored these economic reports as traders remained focused on the upcoming Fed Interest Rate Decision.

The Fed will soon reveal its current view of the economic situation and share its views about inflation. Recent inflation reports from various countries, including U.S., indicated that prices are rising faster than expected.

Canada has just reported that Inflation Rate increased by 3.6% year-over-year in May compared to analyst consensus which called for growth of 3.5%. Core Inflation Rate increased by 2.8% year-over-year compared to analyst consensus of 2.4%.

If the Fed highlights inflation risks, USD/CAD will get more support. If the Fed stays dovish, the U.S. dollar may find itself under more pressure.

Technical Analysis

usd cad june 14 2021

USD to CAD failed to settle above the resistance at the 50 EMA near 1.2200 and pulled back towards the support at 1.2170.

In case USD to CAD manages to settle below this support level, it will head towards the next support which is located at the 20 EMA at 1.2130. A successful test of the support at the 20 EMA will open the way to the test of the support at 1.2100.

On the upside, USD to CAD needs to settle above the 50 EMA to continue its upside move. The next resistance level is located at 1.2250. If USD to CAD gets above this level, it will head towards the resistance at 1.2270. A move above this level will push USD to CAD towards the resistance at 1.2300.

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

Economic Data from China and the UK to Distract the Markets Ahead of the FED

Earlier in the Day:

It was a busier start to the day on the economic calendar this morning. The Kiwi Dollar and the Japanese Yen were in action this morning, with economic data from China in focus later this morning.

For the Kiwi Dollar

Current account figures were out in the early hours.

In the 1st quarter, the current account deficit widened from NZ$2.70bn to NZ$2.90bn, quarter-on-quarter. Economists had forecast a narrowing to NZ$2.23bn.

Year-on-year, the current account deficit widened from NZ$2.55bn to NZ$7.24bn. Economists had forecast a widening to NZ$6.68bn.

The Kiwi Dollar moved from $0.71205 to $0.71215 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.13% to $0.7130.

For the Japanese Yen

Trade data and core machinery orders were in focus this morning.

In April, core machinery orders increased by 0.6%, month-on-month, following a 3.7% rise in March. Economists had forecast a 2.7% rise.

Year-on-year, core machinery orders were up by 6.5% versus a forecasted 8.0% increase. In March, core machinery orders had been down by 2.0% year-on-year.

More significantly, however, Japan’s trade balance slumped from a ¥253.1bn surplus to a ¥187.1bn deficit in May. Economists had forecast a deficit of ¥91.2bn. Exports rose by 49.6%, year-on-year, versus a forecasted 51.3% rise. In April, exports had been up by 38.0%.

According to figures released by the  Ministry of Finance,

  • Exports to China jumped by 23.6%, with exports to Australia and NZ surging by 115.3%.
  • Exports to the U.S surged by 87.9%, with exports to Western Europe up 69.9%.
  • Year-on-year, imports increased by 27.9% in May, which was up from 12.8% in April.

The Japanese Yen moved from ¥110.088 to ¥110.093 upon release of the figures. Through the early hours, the Japanese Yen was down by 0.02% to ¥110.10 against the U.S Dollar.

Out of China

Industrial production, retail sales, fixed asset investment, and unemployment figures are due out. Expect the industrial production and retail sales figures to garner the greatest interest.

At the time of writing, the Aussie Dollar was up by 0.03% to $0.7689.

The Day Ahead

For the EUR

It’s a quiet day ahead on the economic data front. 1st quarter wage growth figures for the Eurozone are due out later today.

Barring particularly dire numbers, however, we don’t expect the numbers to have too much impact on the EUR.

The markets will be looking ahead to the FED’s monetary policy decision and projections late in the day. With the ECB doves in control for now, we could see monetary policy divergence weigh on the EUR.

At the time of writing, the EUR was down by 0.03% to $1.2122.

For the Pound

It’s a relatively quiet day ahead on the economic calendar.

Inflation figures for May are due out later this morning. With little else for the markets to consider, expect the numbers to influence.

A delay in the full reopening of the UK may have eased some pressure on the BoE. A marked pickup in inflationary pressure could fuel speculation of a near-term move, however.

At the time of writing, the Pound was down by 0.02% to $1.4081.

Across the Pond

It’s a relatively busy day ahead on the economic calendar. Key stats include building permit and housing start figures from the housing sector. Import and export price index figures are also due out.

With the FED in action later in the day, however, don’t expect the numbers to have much impact on the Greenback.

Near-term direction will be hinged on FED chatter vis-à-vis any tapering and the latest projections… How FED Chair Powell delivers any shift in stance will be key during the press conference.

At the time of writing, the Dollar Spot Index was up by 0.01% to 90.548.

For the Loonie

It’s a busy day ahead on the economic data front. Inflation figures for May are due out along with wholesale sales figures for April.

Expect the inflation figures to have the greatest influence on the Loonie.

Crude oil inventory numbers will also provide direction along with this morning’s economic data from China.

At the time of writing, the Loonie was flat at C$1.2184 against the U.S Dollar.

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

USD/CAD Daily Forecast – Canadian Dollar Declines As Commodities Move Lower

Canadian Dollar Is Under Pressure Against U.S. Dollar

USD/CAD is currently trying to settle above the resistance at the 50 EMA at 1.2200 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index continues its attempts to settle above the resistance at the 50 EMA at 90.60. If the U.S. Dollar Index gets above this level, it will head towards the resistance at 90.90 which will be bullish for USD/CAD.

Today, foreign exchange market traders focused on the economic data from the U.S. Retail Sales declined by 1.3% month-over-month in May compared to analyst consensus which called for a decline of 0.8%. Industrial Production increased by 0.8% month-over-month in May compared to analyst consensus of 0.6%, while Manufacturing Production grew by 0.9%.

Producer Prices data exceeded expectations in both U.S. and Canada, but it looks that these reports had little impact on currency dynamics as traders remained focused on Fed Interest Rate Decision and the subsequent commentary which will be released on Wednesday.

Meanwhile, Canadian dollar found itself under pressure together with other commodity-related currencies due to the sell-off in commodity markets. Oil moved higher today, but the sell-off in commodities like copper was too strong, so traders ignored positive developments in oil markets.

Technical Analysis

usd cad june 15 2021

USD to CAD managed to settle above the resistance at 1.2170 and is trying to settle above the next resistance level which is located at the 50 EMA at 1.2200.

In case USD to CAD gets above this level, it will head towards the next resistance at 1.2250. A successful test of the resistance at 1.2250 will push USD to CAD towards the next resistance at 1.2270. In case USD to CAD settles above 1.2270, it will head towards the resistance at 1.2300.

On the support side, the previous resistance level at 1.2170 will serve as the first support level for USD to CAD. A move below this level will push USD to CAD towards the next support at 1.2130. The 20 EMA is located in the nearby so USD to CAD will likely get material support near 1.2130.

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

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

Earlier in the Day:

It was another quiet start to the day on the economic calendar this morning. The Aussie Dollar was in action this morning.

For the Aussie Dollar

House price figures and the RBA meeting minutes were in focus this morning.

In the 1st quarter, house prices increased by 5.4% year-on-year, coming up short of a forecasted 5.5% rise. House prices had been up by 3.0% in the 4th quarter of last year.

Salient points from the RBA meeting minutes included:

  • Inflation and wage pressures remained subdued, despite the strong recovery in the economy and employment.
  • Borrowing rates for households and businesses on outstanding loans had continued to drift lower and were also at historical lows.
  • The Bank’s policy package had contributed to a lower exchange rate than would otherwise have been the case.
  • Monetary policy would likely need to remain highly accommodative for some time yet.
  • Government bond purchases discussed and the Board would decide upon future purchases at the July meet that comes ahead of the completion of the second $100 billion of purchases in early September.
  • Options include:
    • Ceasing purchasing bonds in September.
    • Repeating $100 billion of purchases for another 6-months.
    • Scaling back the amount purchased or spread the purchases over a longer period of time.
    • Move to a more frequent review of bond purchases, based on the flow of data and the economic outlook.
  • The Board would not increase the cash rate until actual inflation is sustainably within the 2-3% target range. For this to occur, wages growth would need to be materially higher than it currently is.
  • This would require significant gains in employment and a sustained return to a tight labor market.
  • Members view these conditions unlikely until 2024 at the earliest.

The Aussie Dollar moved from $0.77111 to $0.77027 upon release of the figures and the minutes. At the time of writing, the Aussie Dollar was down by 0.13% to $0.7702.

Elsewhere

Through the early hours, the Japanese Yen was flat ¥110.07 against the U.S Dollar, while the Kiwi Dollar was down by 0.14% to $0.7134.

The Day Ahead

For the EUR

It’s a busy day ahead on the economic data front. Finalized inflation figures for Germany, France, and Italy are due out along with trade data for the Eurozone.

Barring marked revisions from prelims, however, we would expect the trade data for April to have greater influence.

At the time of writing, the EUR was down by 0.02% to $1.2117.

For the Pound

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

Employment figures are due out later this morning. Expect April’s unemployment rate and May’s claimant count to have the greatest impact on the Pound.

Away from the economic calendar, greater certainty over the timing of the UK’s full reopening is going to be needed to support the Pound.

At the time of writing, the Pound was down by 0.07% to $1.4102.

Across the Pond

It’s a busy day ahead on the economic calendar. Key stats include retail sales, wholesale inflation, and industrial production figures.

Following the marked pickup in inflationary pressures, expect the retail sales figures to be key.

Other stats due out include inventory figures for April and the NY Empire State Manufacturing Index numbers for June. Barring particularly dire numbers, however, these should have limited impact on the Dollar and broader market risk sentiment.

At the time of writing, the Dollar Spot Index was flat at to 90.520.

For the Loonie

It’s a quiet day ahead on the economic data front. Housing sector data is due out later today.

We don’t expect the numbers to have much influence on the Loonie, however, leaving the Loonie in the hands of market risk sentiment.

At the time of writing, the Loonie was down by 0.02% to C$1.2147 against the U.S Dollar.

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

USD/CAD Daily Forecast – Canadian Dollar Starts The Week On A Strong Note

U.S. Dollar Is Losing Ground Against Canadian Dollar

USD/CAD is currently trying to settle back below the support at 1.2130 while the U.S. dollar is losing some ground against a broad basket of currencies.

The U.S. Dollar Index did not manage to settle above the 50 EMA at 90.60 and moved below 90.50. The nearest support level for the U.S. Dollar Index is located at 90.30. If the U.S. Dollar Index gets to the test of this level, USD/CAD will find itself under more pressure.

Today, Canada reported that Manufacturing Sales declined by 2.1% month-over-month in April compared to analyst consensus which called for a decline of 1.1%. New Motor Vehicle Sales totaled 167,000 in April, mostly in line with the analyst forecast of 170,000.

These reports had little impact on USD/CAD as foreign exchange market traders wait for Retail Sales data from the U.S., which will be published on Tuesday, and Fed Interest Rate Decision, which will be released on Wednesday.

The key question is whether Fed will be less dovish as recent data suggests that inflation is rising faster than previously expected while the economic growth is strong. Any hawkish words from Fed may provide significant support to the American currency, although it remains to be seen whether Fed is ready to change its tone.

Technical Analysis

usd cad june 14 2021

USD to CAD failed to settle above the resistance at 1.2170 and is testing the support at 1.2130. In case this test is successful, USD to CAD will move towards the next support which is located at the 20 EMA at 1.2115.

A move below the 20 EMA will push USD to CAD towards the next support at 1.2100. If USD to CAD declines below this level, it will head towards the support at 1.2080.

On the upside, the nearest resistance level for USD to CAD is located at 1.2170. If USD to CAD manages to settle above this level, it will head towards the next resistance at the 50 EMA at 1.2200. A move above 1.2200 will push USD to CAD towards the resistance at 1.2250.

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

Economic Data and Central Bank Chatter Put the EUR, the Loonie, and the Pound in Focus

Earlier in the Day:

It was a quiet start to the week on the economic calendar this morning, with Australian and China markets closed today. Later this morning, the Japanese Yen will be in action, however.

For the Japanese Yen

Through the early hours, the Japanese Yen was down by 0.10% to ¥109.77 against the U.S Dollar. Later this morning, finalized industrial production figures for April are due out.

Barring any marked revisions, however, we don’t expect the numbers to influence.

According to prelim figures, industrial production increased by 2.5%, month-on-month. In March, production had risen by 1.7%.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.10% to $0.7700, while the Kiwi Dollar was up by 0.13% to $0.7139.

The Day Ahead

For the EUR

It’s a quiet day ahead on the economic data front. April industrial production figures for the Eurozone are due out later today.

Following some disappointing production figures from France and Germany, a weak set of numbers would pin the EUR back.

At the time of writing, the EUR was down by 0.07% to $1.2101.

For the Pound

It’s a particularly quiet day ahead on the economic calendar.

There are no material stats due out of the UK to provide the Pound with direction.

The lack of stats will leave the Pound in the hands of government plans vis-à-vis remaining COVID-19 restrictions and updates from the G7 Summit.

On the monetary policy front, BoE Gov. Bailey is due to speak late in the day and could move the dial…

At the time of writing, the Pound was up by 0.04% to $1.4113.

Across the Pond

It’s also a quiet day ahead on the economic calendar. There are no material stats due out of the U.S to provide the Dollar with direction.

The lack of stats will leave the Greenback in the hands of market sentiment towards this week’s FOMC meet.

At the time of writing, the Dollar Spot Index was up by 0.02% to 90.576.

For the Loonie

It’s a quiet day ahead on the economic data front. Manufacturing sales figures for April are due out late in the day.

With little else to focus on, we can expect some influence from the numbers.

Ultimately, however, market risk sentiment will be the key driver at the start of the week.

At the time of writing, the Loonie was down by 0.01% to C$1.2159 against the U.S Dollar.

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

The Week Ahead – A Busier Economic Calendar and the FED to Keep the Markets Busy

On the Macro

It’s a busier week ahead on the economic calendar, with 60 stats in focus in the week ending 18th June. In the week prior, 45 stats had been in focus.

For the Dollar:

Early in the week, Wholesale inflation and retail sales figures will be in focus.

While inflation figures remain a key area of interest, retail sales will likely be the main focal point.

On Thursday, Philly FED Manufacturing and weekly jobless claim figures will also influence.

Other stats include industrial production, housing sector data, and manufacturing numbers out of NY State. We don’t expect these to have too much influence in the week, however.

On the monetary policy front, it will be the FED’s June monetary policy decision that will be the main event.

The markets are expecting discussions on a tapering to the asset purchasing program to begin. Will there be talk of a shift in sentiment towards interest rates? The projections will hold the key.

In the week, the Dollar ended the week up by 0.46% to 90.555.

For the EUR:

It’s a relatively quiet week on the economic data front.

Eurozone industrial production, trade, and wage growth figures are due out Monday through Wednesday.

With little else for the markets to consider, we can expect the numbers to influence.

Finalized inflation figures for May are also due out for France, Germany, Italy, and the Eurozone.

Barring marked revisions to prelim figures, however, the numbers should have limited impact on the EUR.

The EUR ended the week down by 0.48% to $1.2108.

For the Pound:

It’s a busier week ahead on the economic calendar.

Employment figures are due out on Tuesday. Expect claimant counts and the unemployment rate to be the key numbers.

On Wednesday, inflation figures will also influence ahead of retail sales figures on Friday.

Impressive numbers will fuel speculation of a near-term move by the BoE. Much will depend upon the government’s reopening plans, however.

On the monetary policy front, BoE Gov. Bailey is scheduled to speak in the week. Expect any forward guidance to influence.

The Pound ended the week down by 0.35% to $1.4107.

For the Loonie:

It’s another quiet week ahead on the economic calendar.

At the start of the week, manufacturing sales figures are due out ahead of inflation figures on Wednesday.

Expect the inflation figures to be key.

Crude oil inventory numbers will also influence mid-week.

The Loonie ended the week down 0.61% to C$1.2158 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a quiet week ahead.

Employment figures for May are due out on Thursday. The numbers remain key, with the RBA unwilling to make a move until the slack is removed. Weak numbers would certainly test support levels.

On the monetary policy front, the RBA meeting minutes early in the week will provide direction.

The Aussie Dollar ended the week down by 0.40% to $0.7708.

For the Kiwi Dollar:

It’s also a quiet week ahead.

1st quarter current account and GDP numbers are due out.

Expect the GDP number on Thursday to be key.

Economic data from China will also influence early in the week.

The Kiwi Dollar ended the week down by 1.16% to $0.7130.

For the Japanese Yen:

Finalized industrial production figures are due out at the start of the week. Expect any marked revisions to influence ahead of trade data on Wednesday.

Inflation figures on Friday should have a muted impact, with the BoJ in action at the end of the week.

The Japanese Yen fell by 0.13% to ¥109.66 against the U.S Dollar.

Out of China

Industrial production, retail sales, and fixed asset investments will be in focus.

Following disappointing numbers for April, the markets will be looking for improvement. Weaker numbers would test support for riskier assets on Wednesday.

The Chinese Yuan ended the week down by 0.05% to CNY6.3988 against the U.S Dollar.

Geo-Politics

There are no major risks to consider in the week ahead. Key takeaways from the G7 will likely influence, however.

As always, however, the markets will need to continue monitoring chatter from Capitol Hill and Beijing.

The Iranian presidential election is in the week ahead…

The Weekly Wrap – Monetary Policy and Economic Data Accompanied Market Optimism

The Stats

It was a quieter week on the economic calendar, in the week ending 11th June.

A total of 45 stats were monitored, following 80 stats from the week prior.

Of the 45 stats, 23 came in ahead forecasts, with 19 economic indicators coming up short of forecasts. There were just 3 stats that were in line with forecasts in the week.

Looking at the numbers, 29 of the stats reflected an upward trend from previous figures. Of the remaining 16 stats, 15 reflected a deterioration from previous.

For the Greenback, economic data and market anticipation ahead of next week’s FOMC policy decision remained the key drivers. In the week ending 11th June, the Dollar Spot Index rose by 0.46% to 90.5550. In the previous week, the Dollar had risen by 0.12% to 90.136.

Out of the U.S

JOLT’s job openings and trade data were in focus early in the week.

The stats were skewed to the positive. In April openings jumped from 8.288m to 9.286m, with April’s trade deficit narrowing from $75.0bn to $68.9bn.

While the stats were market positive, there was limited impact on the Dollar and the broader markets.

The focus was on the weekly jobless claims and inflation figures due out on Thursday.

Also skewed to the positive, the annual core rate of inflation accelerated from 3.0% to 3.8%. Economists had forecast a pickup to 3.4%.

Core consumer prices and consumer prices continued to rise in the month of May and by more than had been expected.

Month-on-month, core consumer prices increased by 0.7% off the back of a 0.9% rise in April.

Initial jobless claim figures were also positive but perhaps not impressive enough to force the FED into action. In the week ending 4th June, initial jobless claims fell from a revised 405k to 376k. Economists had forecast a decline to 370k.

At the end of the week, prelim consumer sentiment figures wrapped things up.

In June, the Michigan Consumer Sentiment index climbed from 82.9 to 86.4. Economists had forecast a rise to 84.0.

In the equity markets, the Dow fell by 0.80%, while the NASDAQ and the S&P500 saw gains of 1.85% and 0.41% respectively.

Out of the UK

It was a relatively quiet week, GDP, manufacturing and industrial production, and trade data in focus.

The markets had to wait until Friday, however, for the numbers.

In April, the UK economy grew by 2.3% in the month, following 2.1% growth in March.

Trade data for April was also positive. The trade deficit narrowed from £11.71bn to £10.96bn, with the non-EU deficit narrowing from £6.55bn to £5.55bn.

While GDP numbers and trade data were positive, production figures disappointed.

Manufacturing production fell by 0.3% versus a forecasted 1.5% increase. Industrial production declined by 1.3% versus a forecasted 1.2% increase.

In the week, the Pound fell by 0.35% to end the week at $1.4107. In the week prior, the Pound had fallen by 0.22% to $1.4147.

The FTSE100 ended the week up by 0.92%, following a 0.66% rise from the previous week.

Out of the Eurozone

 

It was a busy 1st half of the week on the economic data front.

 

The German economy was in focus.

 

In April, German factory orders (-0.20%) and industrial production (-1.00%) unexpectedly fell, following solid gains from March.

 

A modest increase in Germany’s trade surplus also disappointed, falling short of forecasts.

 

Economic sentiment figures from Germany and the Eurozone were also skewed to the negative. Sentiment towards the German and the Eurozone economies weakened marginally in June.

The numbers were not enough to spook the markets ahead of Thursday’s ECB policy decision and press conference.

 

Providing support in the early part of the week were finalized 1st quarter GDP numbers for the Eurozone.

 

Quarter-on-quarter, the Eurozone economy contracted by a modest 0.3%, revised up from a prelim 0.6% contraction.

 

In the 2nd half of the week, the focus was on the ECB and the all-important press conference.

 

Upward revisions to growth and inflation for this year coupled raised the prospects of a possible nearer-term tapering. Talk of unwavering support through the coming months was therefore key. The ECB’s inflation forecasts also pointed to easing inflationary pressures in 2022 and 2023, which also pegged the EUR back.

For the week, the EUR fell by 0.48% to $1.2108. In the week prior, the EUR had fallen by 0.21% to $1.2167.

The DAX30 ended the week flat, while the CAC40 and the EuroStoxx600 rose by 1.30% and by 1.09% respectively.

For the Loonie

It was a quiet week. Economic data was limited to trade data for April, which was positive for the Loonie.

In April, Canada’s trade balance rose from a C$1.35bn deficit to a C$0.59bn surplus.

A further increase in crude oil prices was also Loonie positive.

The main event, however, was the BoC monetary policy decision on Wednesday.

In line with market expectations, the BoC stood pat on monetary policy. Following May’s more hawkish messaging, the BoC took a more cautious approach, avoiding a Loonie rally.

The key takeaway was that the BoC would continue to deliver extraordinary monetary policy support until the 2% inflation target was sustainably achieved.

In the week ending 11th June, the Loonie declined by 0.061% to C$1.2158. In the week prior, the Loonie had fallen by 0.07% to C$1.2084.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 11th June, the Aussie Dollar fell by 0.40% to $0.7708, with the Kiwi Dollar sliding by 1.16% to $0.7130.

For the Aussie Dollar

It was a quiet week. Business and consumer confidence figures were in focus, with the stats skewed to the negative.

In May, the NAB Business Confidence Index slipped from 23 points to 20 points. The modest decline had a limited impact on the Aussie Dollar.

For June, the Westpac Consumer Sentiment Index fell by a further 5.2%. In May, the index had fallen by 4.8%.

Concerns over the a 2-week lockdown in Melbourne weighed on sentiment in the month. Once more, the Aussie Dollar brushed aside the decline.

Market optimism towards the economic outlook and demand for commodities continued to provide support. A U.S Dollar rally from Friday left the Aussie Dollar in the red for the week.

For the Kiwi Dollar

It was also a quiet week.

Electronic card retail sales and Business PMI numbers were in focus.

In May, electronic card retail sales rose by a further 1.7%, following a 4.4% jump in April.

Also positive was an increase in the Business PMI from 58.4 to 58.6. While the headline figure was positive, a slide in the employment sub-index will have been a cause for concern. A marked increase in new orders, however, raises the prospects of a pickup in hiring in the coming months.

For the Japanese Yen

It was a busier week.

Early in the week, finalized 1st quarter GDP numbers were in focus. Upward revisions from prelim numbers were a positive for the Yen.

In the 1st quarter, the economy contracted by 1.0%, revised up from a prelim 1.3% contraction.

At the end of the week, manufacturing sector data disappointed but had a muted impact on the Yen.

For the 2nd quarter, the BSI Large Manufacturing Conditions Index fell from 1.6 to -1.4.

The Japanese Yen fell by 0.13% to ¥109.66 against the U.S Dollar. In the week prior, the Yen had risen by 0.30% to ¥109.52.

Out of China

Trade data and inflation figures were key areas of focus.

Weaker than expected exports tested support for riskier assets at the start of the week.

Exports were up 27.9% year-on-year, falling short of a forecasted 32.1%. In April, exports had been up by 32.3%.

On the inflation front, wholesale inflationary pressures built up further in May. The annual rate of wholesale inflation accelerated from 6.8% to 9.0%. Economists had forecast a pickup to 8.5%.

In the week ending 11th June, the Chinese Yuan fell by 0.05% to CNY6.3988. In the week prior, the Yuan had fallen by 0.42% to CNY6.3953.

The CSI300 and the Hang Seng ended the week down by 1.09% and by 0.26% respectively.

USD/CAD Daily Forecast – Canadian Dollar Is Under Pressure Ahead Of The Weekend

U.S. Dollar Moves Higher Against Canadian Dollar

USD/CAD is currently trying to get to the test of the resistance at 1.2170 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index gained strong upside momentum and is currently testing the resistance at 90.50. If the U.S. Dollar Index moves above this level, it will get to the test of the 50 EMA at 90.60. A move above the 50 EMA will open the way to the test of the resistance at 90.90 which will be bullish for USD/CAD.

Today, U.S. reported that Consumer Sentiment increased from 82.9 in May to 86.4 in June compared to analyst consensus of 84. The stronger-than-expected Consumer Sentiment report provided additional support to the American currency.

Treasury yields have managed to rebound from recent lows, but it remains to be seen whether they will be able to gain upside momentum. At this point, it looks that traders remain confident that current inflation is temporary. If Treasury yields continue their recent downside trend, the U.S. dollar may find itself under more pressure.

Technical Analysis

usd cad june 11 2021

USD to CAD managed to get above the resistance at 1.2130 and is moving towards the next resistance level which is located at 1.2170. In case USD to CAD manages to settle above this level, it will head towards the next resistance at 1.2200.

A successful test of the resistance at 1.2200 will push USD to CAD towards the next resistance at 1.2250. No important levels were formed between 1.2200 and 1.2250 so this move may be fast.

On the support side, USD to CAD needs to get back below 1.2130 to have a chance to develop downside momentum in the near term. The next support level is located at the 20 EMA at 1.2105.

If USD to CAD settles below the 20 EMA, it will head towards the next support at 1.2080. A successful test of the support at 1.2080 will open the way to the test of the support level at 1.2065.

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

Economic Data from the UK Puts the Pound in the Spotlight

Earlier in the Day:

It was a busier start to the day on the economic calendar this morning. The Kiwi Dollar and the Japanese Yen were in action in the early hours.

For the Kiwi Dollar

In May, the Business PMI increased from 58.3 to 58.6. According to the May survey,

  • The production sub-index climbed from 64.2 to 65.3, with the new orders sub-index rising from 61.0 to 63.7.
  • In May, the deliveries sub-index was also on the rise, while the employment sub-index slipped from 52.2 to 51.5. It was a second consecutive monthly decline and a 3rd decline in 5-months.

The Kiwi Dollar moved from $0.71940 to $0.71932 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.14% to $0.7192.

For the Japanese Yen

The BSI Large Manufacturing Conditions Index fell from 1.60 to -1.40 for the 2nd quarter. There was little market reaction in spite of the decline, with Japan’s manufacturing sector continuing to struggle.

The Japanese Yen moved from ¥109.383 to ¥109.377 upon release of the figures. Through the early hours, the Japanese Yen was down by 0.06% to ¥109.40 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.03% to $0.7752.

The Day Ahead

For the EUR

It’s another quiet day ahead on the economic data front. Finalized May inflation figures from Spain are due to later today.

We don’t expect the numbers to have a material impact on the EUR, however. Expect further reaction to the ECB press conference, however.

At the time of writing, the EUR was up by 0.12% to $1.2184.

For the Pound

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

GDP, industrial and manufacturing production, and trade data for April are due out later this morning.

While the GDP and the manufacturing production figures will be the key drivers, expect continued interest in the trade data.

Away from the economic calendar, any further updates on the UK Government’s plans to full reopen will also be key.

On the monetary policy front, BoE Governor Bailey is also scheduled to speak.

At the time of writing, the Pound was down by 0.01% to $1.4176.

Across the Pond

It’s a quieter day ahead on the economic calendar. Prelim consumer sentiment figures for June will be in focus later today.

With little else for the markets to consider, expect sensitivity to the numbers.

Away from the economic calendar, chatter from the G7 Summit will also need monitoring.

At the time of writing, the Dollar Spot Index was down by 0.06% to 90.019.

For the Loonie

It’s another particularly quiet day ahead on the economic data front, with no major stats to consider.

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

At the time of writing, the Loonie was up by 0.05% to C$1.2090 against the U.S Dollar.

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

USD/CAD Daily Forecast – Canadian Dollar Continues To Trade In A Tight Range

USD/CAD Video 10.06.21.

U.S. Dollar Is Mostly Flat Against Canadian Dollar

USD/CAD is still trading near the 20 EMA at 1.2100 while the U.S. dollar is losing some ground against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle below the support at the 90 level but failed to develop sufficient downside momentum and rebounded back above this level. As a result, the U.S. Dollar Index remains stuck between 90 and the resistance at the 20 EMA at 90.20. If the U.S. Dollar Index gets above the 20 EMA, it will move towards 90.50 which will be bullish for USD/CAD.

Today, the U.S. reported that Inflation Rate increased by 5% year-over-year in May compared to analyst consensus which called for an increase of 4.7%. On a month-over-month basis, Inflation Rate grew by 0.6% compared to analyst consensus of 0.4%. Core Inflation Rate was also higher than expected as it grew by 3.8% year-over-year compared to analyst consensus of 3.4%.

The reports indicated that inflation continued to gain ground but the reaction of foreign exchange market traders was muted. The reaction of the bond market was even more strange as Treasury yields moved to multi-week lows. At this point, it looks that Fed officials managed to calm traders who remain confident that high inflation numbers are temporary.

Technical Analysis

usd cad june 10 2021

USD to CAD is currently trying to stay above the 20 EMA at 1.2100. In case USD to CAD manages to stay above this level, it will head towards the resistance at 1.2130.

If USD to CAD gets above 1.2130, it will move towards the next resistance level which is located at 1.2170. A successful test of the resistance at 1.2170 will push USD to CAD towards the resistance at 1.2200.

On the support side, a move below the 20 EMA will push USD to CAD towards the support at 1.2080. If USD to CAD gets below this level, it will move towards the support at 1.2065. A successful test of the support at 1.2065 will open the way to the test of the next support at 1.2040.

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

The ECB Press Conference Puts the EUR in the Spotlight, with U.S Inflation also in Focus

Earlier in the Day:

It was a quiet start to the day on the economic calendar this morning. There were no material stats to provide the markets with direction early in the Asian session.

For the Majors

At the time of writing, the Aussie Dollar was down by 0.04% to $0.7728, with the Kiwi Dollar down by 0.14% to $0.7170.

Through the early hours, the Japanese Yen was flat at ¥109.63 against the U.S Dollar, while

The Day Ahead

For the EUR

It’s a quieter day ahead on the economic data front. French nonfarm payrolls for the 1st quarter are due out ahead of the European open.

We don’t expect too much influence from the numbers, with COVID-19 lockdown measures likely to have influenced.

Later in the day, the ECB will deliver it’s June monetary policy decision, which is the main event of the week.

With the markets expecting the ECB to stand pat on policy, any talk of tapering and the ECB’s outlook on inflation and the economic recovery will be key. Ahead of the meeting, the ECB doves had assured the markets that there would be no tapering to the asset purchasing program any time soon.

At the time of writing, the EUR was down by 0.02% to $1.2178.

For the Pound

It’s another quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

Near-term, the Pound remains torn between an optimistic economic outlook and concerns over new strains of the coronavirus.

At the time of writing, the Pound was down by 0.04% to $1.4112.

Across the Pond

It’s a busier day ahead on the economic calendar. May inflation and weekly jobless claims figures will be in focus.

Sensitivity to any marked pickup in inflationary pressures will likely spur demand for the Greenback. A marked fall in jobless claims would also add demand for the Dollar ahead of next week’s FOMC meeting. The willingness to begin discussing a tapering to the asset purchasing program coupled with positive stats would raise the prospects of a nearer-term move by the FED.

Away from the economic calendar, chatter from Capitol Hill will also need monitoring.

The Dollar Spot Index rose by 0.05% to end Wednesday at 90.120.

For the Loonie

It’s a particularly quiet day ahead on the economic data front, with no major stats to consider.

The lack of stats will leave the Loonie in the hands of crude oil prices and OPEC’s monthly report.

At the time of writing, the Loonie was down by 0.01% to C$1.2112 against the U.S Dollar.

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

USD/CAD Daily Forecast – Canadian Dollar Is Flat After BoC Interest Rate Decision

USD/CAD Video 09.06.21.

USD/CAD Remains Stuck Near 1.2100

USD/CAD continues its attempts to settle above the resistance at the 20 EMA at 1.2100 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle below the support at the 90 level but lost momentum and moved back above 90. The nearest resistance level for the U.S. Dollar Index is located at the 20 EMA at 90.20. In case the U.S. Dollar Index gets above this level, it will gain additional upside momentum which will be bullish for USD/CAD.

Today, foreign exchange market traders focused on Bank of Canada’s Interest Rate Decision. BoC left the interest rate unchanged at 0.25% and stated that it would hold the rate at the current level until inflation objective was sustainably achieved. Bank of Canada targets inflation of 2%. The current quantitive easing program was also left unchanged.

Tomorrow, traders will focus on the ultra-important U.S. inflation data which will likely have a very serious impact on currency dynamics. Recent trading sessions have shown that traders were not ready to make big moves ahead of the release of U.S. inflation data, and I’d expect increased volatility on Thursday.

Technical Analysis

usd cad june 9 2021

The technical picture for USD to CAD has not changed in recent trading sessions. If USD to CAD settles above the 20 EMA at 1.2100, it will move towards the resistance at 1.2130.

A successful test of the resistance at 1.2130 will open the way to the test of the next resistance at 1.2170. If USD to CAD gets above this level, it will move towards the resistance which is located at 1.2200.

On the support side, the nearest support level for USD to CAD is located at 1.2080. If USD to CAD manages to get back below this level, it will move towards the support at 1.2065. A move below the support at 1.2065 will push USD to CAD towards the support at 1.2040.

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

Buyers Do Not Have Enough

Indices are firm in the middle of the week with the SP500 flirting with all-time-highs and the Nasdaq coming back above major supports. Two main indices are slightly behind: the DAX and Nikkei but we cannot say that there is a major bearish situation there. At least not yet.

Gold protected the crucial mid-term up trendline and saved its positive sentiment.

Brent Oil escaped from a few days long consolidation and is aiming for new long-term highs.

The USDCAD consolidated above the strong long-term horizontal support, which may indicate willingness for a breakout.

The ERUCHF keeps dropping but the price is getting closer to the mother of all supports, where the situation can get very interesting.

The EURAUD is in a very clean price action setup, where the price bounces from a combination of two horizontal and one dynamic resistance. As long as we stay below, the sentiment is negative.

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

Stocks Continue Higher Amid Rising Prices

Asian markets are mixed and European bourses have opened up in similar fashion. That said, global equity indices are still sitting near to record / cycle highs as the Fed’s patient message continues to mean the stimulus punchbowl are still being passed around.

We had another reminder this morning about rising price pressures with China’s producer prices increasing at their fastest pace in 13 years. Soaring commodity prices as well as a low base effect after being in negative territory for most of last year has seen the index jump in recent months. This will add to global inflationary pressures and perhaps more action from the Chinese government economic planning agency who last month warned of “excessive speculation” in commodity markets and a crack down on monopolies.

Majors rangebound

Expect more quiet trade in dollar crosses today ahead of the US CPI data and ECB meeting tomorrow. Sterling is trapped in a 1.41-1.42 range with the reopening delay not unduly worrying markets that much. June 21 has been in the minds of many in the UK, but a postponement of a couple of weeks is being signalled by the government.

gbpusddaily_810

The swissie has been attracting buyers this week ahead of the ECB meeting tomorrow with USD/CHF back into its descending channel after venturing north last week above 0.9050. Bear will target the cycle low at 0.8930 unless the US inflation data prints to the topside of estimates.

Bank of Canada to stand pat

After shifting to a hawkish bias at its last meeting in April with the signalling of a rate rise in late 2022 and a second taper of its QE program, the leading hawkish central bank of the moment is set to wait for more post-lockdown data before continuing on its merry way to policy normalisation. A positive tone is expected from the Bank of Canada with an impressive vaccine rollout and strong CPI figures offset by two months of disappointing jobs data.

USD/CAD continues to consolidate above long-term support around 1.20. Any rebounds have been lacking in momentum with prices only moving above 1.22 on one occasion since mid-May. A downside break needs to develop sooner rather than later though as otherwise a deeper retracement may come into play.


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Without Yield Support, the Dollar Wilts

The JP Morgan Emerging Market Currency Index is edging higher for the fourth consecutive session. The lower yields are not doing equities much good today. Outside of China, the large equity markets in the region fell, and the MSCI Asia Pacific Index is posting back-to-back losses. The three-day rally in Europe’s Dow Jones Stoxx 600 is at risk as most sectors, but health care and real estate, are losing ground. Financials are the largest drag.

US future indices are a little changed to slightly firmer. Oil and other industrial commodities are firmer, and the CRB Index closed yesterday at new six-year highs. Gold is unable to benefit from the weaker dollar and lower interest rates. The upside momentum that had carried it briefly above $1900 fizzled.

Asia Pacific

China reported a smaller than expected rise in last month’s consumer prices but a larger rise in producer prices. Falling food prices helped temper the rise in consumer prices to 1.3% rather than 1.6% that the median in Bloomberg’s survey projected. The decline in pork prices helped keep food prices in check, while non-food prices rose by 0.9%. Producer price inflation accelerated to 9.0% from 6.8%. The median forecast was 8.5%. Oil, metals, and chemicals were the drivers. Beijing is trying to finesse lower producer prices by cracking down on unauthorized activity, but it does not appear sufficient.

Reports suggest it is considering some sort of cap on thermal coal prices before peak summer demand. One proposal would cap the price to the miners, while another proposal was to limit the price at the port. Still, the discussion shows that Chinese officials are still reluctant to allow supply/demand to adjust prices. If thermal coal prices or other commodities are not allowed to move freely, is Beijing really prepared to allow the yuan to be convertible as some are suggesting could take place with the introduction of a digital yuan?

The Reserve Bank of Australia did not adjust policy last week, but comments today suggest it may join the queue of central banks adjusting their stance as the inoculations are gradually allowing some return to normalcy. Former RBA member Edwards said that the RBA would likely scale back its QE next month, which others, including ourselves, had suggested was possible.

The RBA’s Assistant Governor Kent admitted he has been surprised by the strength of the rebound and is optimistic about growth fueling wage increases and inflation. Currently, the RBA targets the April 2024 bond at 10 bp. It is to decide next month whether to switch it to the November 2024 maturity. Targeting the 3-year yield at the cash rate is a way to underscore the lack of intent to raise rates in the interim.

The dollar is trapped in almost a 20-pip range against the yen today in the upper end of this week’s range. It has not been above JPY109.65 so far this week nor below about JPY109.20. There are about $1.2 bln in options in the JPY109.00-JPY109.10 area that roll-off today. The benchmark three-month implied volatility reached almost 5.53% yesterday, its lowest level since February 2020. The Australian dollar is steady, trading inside yesterday’s range, which was inside Monday’s range (~$0.7725-$0.7765). Like the dollar-yen, the Aussie is also in a 20-tick range so far today.

The Chinese yuan rose today, recouping the losses seen in the past two sessions. The dollar reached CNY6.4120 at the end of last week but has consistently recorded lower highs and lower lows this week. The PBOC’s reference rate for the dollar was set at CNY6.3956, spot on expectations. It is beginning to look as if official intent is more about breaking the one-way market that had appeared to develop and stabilize the yuan rather than reverse it. Whether defending a set line, which some have suggested at CNY6.35 or not, still has to be seen.

Europe

The ink G7 finance minister agreement on the minimum corporate tax is hardly even dry, and the first exception is being sought. The UK (and apparently the EU) want to exclude financial services from the new global tax regime. Separately, the US and the EU will have a rapprochement that will resolve the two outstanding disputes: The goal is to resolve the Boeing/Airbus subsidy issue by July 11 and end the steel and aluminum tariffs imposed by the Trump administration on national security grounds by the end of the year. The US has protested but will not escalate the sanctions for the Nord Stream 2 pipeline, and the tax reform would see European countries drop their digital tax initiatives.

Meanwhile, Europe is gradually taking a harder line against China. The EU Parliament is not proceeding with the ratification of the EU-China trade agreement struck at the end of last year. Italy, which was the only G7 country to sign on to the Belt Road Initiative, has blocked Chinese acquisitions under Prime Minister Draghi. Europe has endorsed the US call for new efforts to find the origins of Covid-19, even though the origins are unnecessary to combat virus and protocols to tighten security as labs during such work are necessary regardless of the precise origin.

Germany reported a 15.5 bln euro trade surplus in April, down from 20.2 bln in March. Exports growth slowed to 0.3% after a 1.3% gain previously. Imports fell by 1.7%, more than expected after the March series was revised to show a 7.1% gain (initially 6.5%). The smaller trade surplus translates into a smaller current account surplus (21.3 bln euros vs. 30.0 bln in March).

Unlike what we saw yesterday with the Japanese trade and current account figures, the German current account is driven by the trade balance. In Japan, the current account surplus is driven by foreign earnings, interest, royalties, and licensing fees, not trade in goods and services.

The euro is firm, but it too is trading inside yesterday’s range, which is inside Monday’s range (~$1.2145-$1.2200). There is an option for about 1.14 bln euros at $1.22 that expires today. The market is also circumspect ahead of tomorrow’s ECB meeting, for which a consensus has emerged that it will not return its bond-buying to that which prevailed before March.

We caution that knowing the ECB’s bond-buying plans does not help trade the euro or European rates, both of which have risen since the ECB accelerated its buying. Sterling, too is range-bound with last Friday’s range (~$1.4085-$1.4200). The general consolidative tone looks set to continue.

America

The Bank of Canada meeting is the highlight of the North American session today. At its last meeting in April, it announced it would slow its bond purchases and brought forward the closing of the output gap into H2 22. Since then, Canada has reported back-to-back job losses. The Canadian dollar has appreciated by almost 3.4% since that April meeting. It is the strongest of the major currencies. A decision on whether to proceed with tapering is expected at next month’s meeting, not today.

Yesterday, Canada reported an unexpected trade surplus for April. Exports and imports fell, with motor vehicle trade disrupted by the line shutdowns due to the shortage of semiconductors. Canada’s energy trade balance was in surplus by about C$6.8 bln, while the non-energy balance was in deficit by about C$6.2 bln. Canada had a C$6.4 bln surplus with the US and a C$2.2 bln deficit with China.

The US reports wholesale inventory data today ahead of tomorrow’s May CPI. The focus, however, is shifting to next week’s FOMC meeting. Yesterday, the US sold $58 bln 3-year notes. Although the high yield slipped fractionally, the bid cover ticked up, as did indirect bids. Today, the Treasury sells $38 bln 10-year notes and tomorrow $24 bln 30-year bonds.

Tomorrow’s four and eight-week bill auctions may draw more attention than usual as the earlier bill auctions showed a little uptick as the market anticipates that the Fed may have to tweak the interest it pays on reserves or the zero rate on the reverse repos (demand reached a new record of almost $500 bln yesterday). Separately, the US Senate passed (68-22) the bill to boost US competitiveness, which has some elements that were in the infrastructure bill. The bill now gets taken up by the House.

Mexico reports May CPI figures today. The year-over-year pace is expected to pull back from the 6.08% pace seen in April but not sufficiently to change anything. Moreover, the core rate is expected to quicken a little. Through April, Mexico’s core rate has risen by almost 5% at an annualized rate. The market appears to lean toward a rate hike by the end of the year and as much as four hikes by the middle of 2022. Brazil reports its IPCA inflation today as well.

The year-over-year pace is expected to have accelerated to nearly 8% from about 6.75% in April. The central bank has already indicated it will raise rates next week by 75 bp, the third such move of the year. It would lift the Selic rate above Mexico’s cash target rate after having begun the year at half of it.

A little position squaring yesterday lifted the US dollar to almost CAD1.2120, but it has come back offered today and traded CAD1.2085 in the European morning. This week’s low so far is about CAD1.2055. Key technical support is seen at CAD1.20, while CAD1.2145 marks the upper end of the recent range.

The Mexican peso is rising for the fourth consecutive session, the longest rally in two months. The greenback finished last week near MXN19.96 and is testing MXN19.62 now, its lowest level in five months. The next area of chart support is seen near MXN19.50. The US dollar is also on its 2021 lows against the Brazilian real. It has not been below BRL5.0 since last June.

This article was written by Marc Chandler, MarctoMarket.

Economic Data from Germany and the BoC Put the EUR and the Loonie in Focus

Earlier in the Day:

It was a relatively busy start to the day on the economic calendar this morning. The Aussie Dollar was in action this morning, with economic data from the China also in focus.

For the Aussie Dollar

In June, the Westpac Consumer Sentiment Index fell by 5.2% to 107.2, The fall in June followed on from a 4.8% decline in May.

According to the latest Westpac Report,

  • 2 consecutive monthly declines followed a jump to an 11-year high in April.
  • Concerns over a 2-week lockdown in Melbourne weighed on consumer sentiment.
  • All components of the index were in decline in June.
  • Economic conditions next 12-months slid by 10.3%, with family finances vs a year ago down by 8.5%.
  • The unemployment expectations index rose by 8.2% but was still down by 14.8% year-on-year.

The Aussie Dollar moved from $0.77427 to $0.77421 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.08% to $0.7736.

From China

Inflation figures also drew attention.

In May, the annual rate of inflation ticked up from 0.9% to 1.3%. Economists had forecast an annual rate of inflation of 1.6%. Month-on-month, consumer prices fell by 0.2%, following a 0.3% decline in April.

Wholesale inflationary also accelerated. The annual rate of wholesale inflation accelerated from 6.8% to 9.0%. Economists had forecast an annual rate of wholesale inflation of 8.5%.

The Aussie Dollar moved from $0.77417 to $0.77426 upon release of the figures.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.01% to ¥109.49 against the U.S Dollar, while the Kiwi Dollar was down by 0.06% to $0.7196.

The Day Ahead

For the EUR

It’s a quieter day ahead on the economic data front. The German economy is back in focus, with trade data for April due out later this morning.

With little else to focus on ahead of tomorrow’s ECB policy decision and press conference, we can expect the numbers to influence.

At the time of writing, the EUR was up by 0.06% to $1.2180.

For the Pound

It’s another quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

At the time of writing, the Pound was flat at $1.4157.

Across the Pond

It’s also a particularly quiet day ahead on the economic calendar. There are no material stats to provide the Dollar and the broader markets with direction.

The lack of stats will leave updates from Capitol Hill in focus.

At the time of writing, the Dollar Spot Index was up by 0.01% to 90.084.

For the Loonie

It’s a quiet day ahead on the economic data front, with no major stats to consider.

The BoC is in action, however, which will certainly provide the Loonie with direction.

Following hawkish chatter last time around, will there be any hawkish chatter or will be the BoC be a little skittish over a possible jump in the Loonie?

At the time of writing, the Loonie was up by 0.01% to C$1.2110 against the U.S Dollar.

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