- Focus remains on US debt ceiling discussions.
- FX trading with “risk-off” bias
- US dollar opens with a bid.
USDCAD snapshot: open 1.3542-46, Fri-close-Tues open range: 1.3483-1.3544, close Friday 1.3495, WTI $72.09, Gold $1956.88
The Canadian dollar has been on the defensive since Monday morning due to widespread demand for US dollars. Even, so, the price action has been contained inside last week’s range which indicates that markets are undecided.
The ongoing US debt ceiling theater is an increasing worry to traders as the June 1 default deadline approaches. President Biden and House Speaker Kevin McCarthy concluded a “productive” meeting Monday which raised hopes a deal would soon be announced.
The G-7 meeting concluded with a long-winded communique that very politely called out China for it’s South China Sea stance, saying its claims have no legal basis. They also told China to stop meddling and interfering in G-7 democratic institutions.
The Canadian dollar also saw some selling pressure after Friday’s 1.4% drop in Retail Sales. The decline was expected but it is evidencing the domestic economy is slowing.
On Monday, China left its benchmark interest rates unchanged. The 1-Year Loan Prime Rate remains at 3.65% and the 5-Year Loan Prime Rate at 4.30%.
EURUSD chopped about in a 1.0771-1.0820 range since Friday’s close.. Eurozone PMI data was close to expectations. Manufacturing PMI ticked lower while the Services PMI gained.
GBPUSD traded negatively in a 1.2375-1.2470 range, with the peak seen on Monday. UK PMI data was disappointing as Services PMI dipped to 55.1 from 55.9 previously. The intraday technicals are bearish below 1.2460, looking for a test of support at 1.2340.
USDJPY rallied from 137.49 to 138.87, powered by the rise in the US 10-year Treasury yield from 3.65% on Monday to 3.75% this morning.
AUDUSD is trading at 0.6619, its lowest since Friday, after peaking at 0.6666 on Monday. The currency is weighed down by poor risk sentiment due to the ongoing US debt ceiling talks.
NZDUSD is at 0.6252 after trading in a 0.6247-06302 range ahead of tomorrow’s RBNZ monetary policy meeting. Analysts expect a 25 bps increase, but some predict a 50 bp bump.
Today’s US data includes New Home Sales, Redbook Index and S&P Global PMI data. In Canada Industrial Product Price and Raw Materials Price are on tap.
