- Headline Canada retail sales expected at 0.0% in June.
- European and UK data weaker than expected, supporting US dollar.
- USD dollar rebounds across the board.
USDCAD: open: 1.3566-70, overnight range: 1.3533-1.3579, close 1.3551, WTI $78.78, Gold $1902.87
The Canadian dollar traded erratically overnight and is well offered in early NY trading today. The Canadian dollar extended its Asian losses in Europe after a series of week European and UK economic reports ignited fresh US dollar demand.
USDCAD has climbed steadily all month and is in an uptrend channel bound by 1.3630 at the top and 1.3510 at the bottom. However there is significant resistance in the 1.3590 area which will slow further gains.
Canadian Retail Sales are expected to continue the softening trend and Statistics Canada estimates that the June results will be unchanged from May. The domestic data may be important for Bank of Canada monetary policy deliberations but not much of a factor for USDCAD traders. They are focused on the US and awaiting Fed Chair Powell’s speech from Jackson Hole, on Friday.
EURUSD finds itself at the lower end of its 1.0807 to 1.0871 overnight range during the early New York trading session. Prices exhibited an upward drift toward the session peak until the release of German and Eurozone PMI data. Traders were disappointed. German and Eurozone Services and composite PMI (reports were weaker than forecast and EURUSD dropped.
GBPUSD declined sharply, tumbling from 1.2764 to 1.2627 after disappointing Services PMI data which fell to 48.7 in August compared to 51.5 in July. The PMI report noted that “High interest rates continue to cast a shadow over the UK economy, creating a lull in new orders, stunting output, and ensuring prospects for the private sector remain uncertain.”
USDJPY traded bearishly in a 145.25-145.77 band ensued as Treasury yields dipped. The 10-year Treasury yield fell to 3.27% from 3.36% yesterday.
AUDUSD displayed a defensive trading stance in a range of 0.6413 to 0.6453. Prices were weighed down by weak PMI data and broad-based US dollar strength. Fears of an economic slowdown in China are also undermining prices.
Today’s US data includes new home sales for July along with the second-tier S&P Global PMI report.
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