FX & market recap:
The US dollar added to Friday’s gains on Monday, underpinned by reports that the number of new US coronavirus cases are slowing. A robust US Manufacturing PMI data (actual 54.2 vs 51.6 in June), on Monday, helped. Gains were limited because Congress has not passed a new coronavirus relief bill.
Wall Street rallied Monday with the Nasdaq posting another daily record high. Asia equities followed Wall Street’s lead. European bourses are flat to lower, following strong gains on Monday. US equity futures are modestly in the red. Canada and US economic calendars are light and won’t matter to FX traders.
Canadian dollar highlights:
USD/CAD tracked broad US dollar moves, but the price action was muted compared to that of AUD/USD. Canada GDP (Friday) was better than expected but ignored as the gains will still leave Q2 GDP down around 12%. USD/CAD tested 1.3450 resistance yesterday, and 1.3350 support overnight. Both levels held. Price action will continue to be dictated by broad US dollar sentiment with traders cautious ahead of Friday’s Canadian and US employment reports.
EUR/USD closed at 1.1763, Friday, and traded in a 1.1703-1.1806 range, until opening today at 1.1794. Eurozone PMI boosted prices to 1.1780, and US ISM PMI drove prices to the low. EUR/USD recouped the losses on the back of political inaction around a new relief bill, narrowing interest rate differentials between the US and Europe, and EUR/USD technical which are bullish above 1.1460.
British pound highlights:
GBP/USD peaked at 1.3163, coinciding with the 11:00 am fix, heavily utilized by portfolio managers to determine FX rebalancing needs. The speculation earlier in the week of heavy GBP/USD demand proved correct. GBP/USD slid to 1.3008 yesterday in NY before recovering to 1.3106 overnight. Prices resumed their slide in NY today.
Asia Pacific highlights:
USD/JPY lured bears with a decisive break of 105.50 last week that targeted further losses to 101.50. The trap snapped shut Friday when prices soared to 106.03. Prices bounced between 105.55 and 106.45 yesterday, and they are trading at 106.10 in NY today.