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Canadian dollar update – Wednesday July 29, 2020. US dollar continues to slide into FOMC.

Canadian dollar update – Wednesday July 29, 2020. US dollar continues to slide into FOMC.
Arif Harji
by Arif Harji on July 29, 2020

CURRENCY MARKET UPDATE

FX & market recap:

The US dollar slid into the New York open. Traders’ are content to await the results of the FOMC meeting this afternoon. Yesterday, Wall Street closed on a down note, setting the tone for a mixed Asia session. The major stock indexes bounced either side of unchanged. US equity futures are slightly positive.

Today’s FOMC meeting statement and Jerome Powell’s press conference give traders the excuse to do nothing, which will describe the price action until 2:00 pm ET. The Fed isn’t expected to offer anything new. They will be content to “sit and wait” until more data is available to enable them to assess the impact of their previous actions. The Fed announced a year’s worth of policy changes in March and will be content to await more data before doing anything else. The US dollar continues to probe major resistance levels in G-10 currencies but until major support in the US dollar index at 93.15-93.30, further US dollar losses may be hard to come by. US Pending Home Sales, Wholesale Inventories and Goods trade balance data are on tap but will be largely ignored ahead of the FOMC meeting.

Canadian dollar highlights:

USD/CAD continues to bounce within a 1.3340-1.3430 range. Prices are weighed down by general US dollar weakness, and expectations for CAD demand due to portfolio rebalancing flows at month-end.

Euro highlights:

EUR/USD traded in a 1.1715-69 range overnight. It drifted in Asia, then rallied from 1.1740 to 1.1769 in Europe before retreating to 1.1747 at the NY open. The dollar continues to be on the defensive due to rising coronavirus cases, and social unrest in US cities. Markets are also waiting for a new stimulus plan to replace the CARES Act which expires Friday.

British pound highlights:

GBP/USD traders are as attracted to the 1.3000 level as mariners are to mermaids. Mermaids weren’t good for ships, and 1.3000 is unlikely to be healthy for GBP/USD bulls. The currency pair may be getting an added lift from month-end portfolio rebalancing flows. GBP/USD traded in a 1.2913-1.2975 range and is flirting with the top in NY trading.

Asia Pacific highlights:

USD/JPY dropped to 104.81 on safe-haven demand for yen, thanks to rising US COVID-19 cases, and bearish technicals. The break below support at 106.10 and 105.50 targeted 104.40 and 102.95.

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