FX & market recap:
It is going to be a short week. Canada is closed on July 1st for Canada Day, while American’s get a long weekend, starting Friday for Independence Day. FX traders won’t have much incentive to get involved until Wednesday. Fed Chair Powell’s semi-annual testimony to Congress and the minutes from the June 10th FOMC meeting are due that day.
The number of new COVID-19 cases in the US accelerated. The Washington Post reported 242,369 new US coronavirus cases since June 23rd. The question is, “Is this the second wave, or just a continuation of wave 1?”
Today’s Canadian data includes Raw Material Prices and Industrial Product Prices. US releases Pending Home Sales.
Canadian dollar highlights:
USD/CAD rallied to 1.3714 on Friday, ahead of the 11:00 am ET fix, which suggests some pre-month-end demand for US dollars. The S&P 500 is down 1.16% Month-to-date, as of June 26th, which suggests USD/CAD demand by portfolio managers. However, prices quickly retreated and snapped the nascent uptrend and leaving the downtrend line from March (daily chart) intact. USD/CAD traders will bide their time until Friday’s nonfarm payroll data is released.
EUR/USD drifted higher overnight, rising from 1.1219 to 1.1280 in NY. The single currency climbed on news that Germany’s parliament approved stimulus measures including a VAT cut, and a better than expected Eurozone Business Climate Index for June (actual -2.26 vs forecast -3.91). The short term technicals favour further gains toward 1.1450, while prices are above 1.1170.
British pound highlights:
GBP/USD traded in a 1.2316-88 range and is just above its session lows in NY. Sentiment is bearish as the EU/UK trade talks resume. Apparently, UK PM told the Polish Prime Minister that he would accept an Austria-style trade deal, which is close to a “no-deal” Brexit.
Asia Pacific highlights:
USD/JPY traded in a narrow range, undermined by a drop in US Treasury yields and concerns about surging coronavirus cases in the US. The short term technicals are bearish while prices are below 107.50, looking for a break of support at 107.05 to extend losses to 106.00.