- Dovish BoJ expectations sink Japanese yen.
- GBPUSD falls despite mildly better than expected retails sales data.
- US dollar flexing its muscles ahead of FOMC meeting next week.
USDCAD: open 1.3162-66, overnight range 1.3121-1.3171, close 1.3164, WTI 75.67, Gold $1980.97
The Canadian Dollar hasn't changed much today, but it has performed better than many of its peers. Firmer oil prices and a positive outlook for crude have boosted West Texas Intermediate, which is currently trading near the top of its overnight range at $75-76.67, thanks to a stronger US dollar and expectations of tightening supply.
FX activity is expected to be fairly subdued today as traders are shifting their focus to next week's FOMC decision on Wednesday and the ECB announcement on Thursday.
Asian equity indexes closed with mixed results. Major Chinese indices rose slightly, while Japan's Nikkei 225 index dipped by a mere 0.28%.
In Europe, bourses are trading positively, with the UK FTSE 100 leading with a 0.76% rise. S&P 500 futures have also risen by 0.18%,
indicating a positive opening on Wall Street. The US 10-year Treasury yield remains largely unchanged at 3.841%.
USDCAD traders are keeping an eye on Retail Sales, which is expected to have risen by 0.5% month-on-month in May, or 0.2% excluding auto sales. However, this data is not likely to have a significant impact on USDCAD trading as it precedes the latest Bank of Canada (BoC) rate hike.
EURUSD traded in a range of 1.1122-1.1144, with prices on the defensive due to reports that ECB officials are less hawkish than before, suggesting that the interest rate spreads between the EU and the US may widen, favoring the USD.
GBPUSD ignored weaker-than-expected consumer confidence data and rallied after UK June retail sales rose by 0.8% month-on-month (forecast was 0.1%), but the gains were not sustained, and prices fell from 1.2903 to 1.2842.
USDJPY rallied strongly, rising from 139.76 to 141.94, as analysts believe that the BoJ will leave monetary policy and the Yield Curve Control (YCC) band unchanged at next week's meeting. Japanese inflation also ticked up, with the Core-CPI report rising to 3.3% compared to 3.2% year-on-year in May.
AUDUSD is trading at the bottom of its range, which is 0.6734-0.6787, due to the overall strength of the US dollar and caution ahead of next week's inflation and retail sales reports.
The US economic calendar is empty today, with no major data releases scheduled.
