All eyes on Powell at 10amET. Text of testimony to be released at 8:30amET.

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SUMMARY
ANALYSIS
USDCAD
Dollar/CAD sits at familiar chart resistance in the 1.3120-30s this morning as the broader USD enters a lull ahead of a huge day of news. First up will be the text of Jerome Powell’s speech before the US House Financial Services Committee (to be released at 8:30amET). The Fed chairman will then begin speaking at 10amET. The 10am hour will also feature the Bank of Canada’s latest interest rate decision, following by a press conference at 10:15amET. The weekly EIA oil inventory report comes next at 10:30amET, where traders will be expecting a similar draw to what the API reported last night. The Fed’s Bullard will be speaking at 1:30pmET and finally we’ll get the Minutes from the last Fed meeting at 2pmET. Global bond markets continue to exhibit anxiety ahead of Powell, by virtue of US 10yr yields bouncing to 2.10% and German bund yields bouncing to -0.30%, but we think there’s a good chance the “Fed rate-cut trade” can recover here should the Fed chairman deliver dovish, or even confusing testimony. The Bank of Canada is expected to keep rates on hold and to talk up the Canadian economy. The key, in our opinion here, is how “negatively” Stephen Poloz describes what’s going on globally with trade uncertainty. We think an even more cautious tone could spook the funds, who have just recently flipped to a net short position in USDCAD.
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EURUSD
Rising bund yields seemed to caring EURUSD back above the important 1.1200 support level in early European trade today but trend-line chart resistance in the 1.1220s is capping as we head into NY trade. With momentum now swinging downward ahead of Powell, we have to wonder if the Fed chairman will try to kill the rate cut doves here.
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GBPUSD
Sterling is rebounding this morning as well as UK 10yr gilt yields bounce higher to +0.78%. Today’s weaker than expected Industrial Production and Manufacturing Production figures out of the UK for May were far from positive (+1.4% MoM vs 1.5% exp and +1.4% MoM vs +2.1% exp respectively). The UK reported May GDP in line with expectations of +0.3% MoM, which seemed to be a non-event for traders. We think today’s move so far has more to do with pre-Powell positioning.
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AUDUSD
The Aussie is finding itself in a bit of trouble this morning, technically speaking, after the 0.6930-40 support level gave way in NY trade yesterday. Last night’s awful Westpac Consumer Confidence reading for July (-4.1% vs -0.6% for June) follows the weak NAB survey from the day before, and is not doing wonders for AUD sentiment in our opinion. A dovish Powell needs to come to rescue for AUDUSD here, otherwise we could see the fund shorts take charge again and push this market below the 0.6900 level.
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USDJPY
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Charts: TWS Workspace
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