Broader USD trading quietly, building upon yesterday's gains.
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Dollar/CAD is testing the upper bound of its recent range this morning as October crude oil prices pull off their overnight highs in the 56.50s. Yesterday’s rally didn’t have much of anything fundamentally bullish USD or bearish CAD behind it, but we would note the bullish, outside day, candle pattern that formed on the daily chart. The Canadian dollar was also sold across the board yesterday (against EUR, GBP, AUD and JPY), which we found interesting. Perhaps the street was reducing some CAD exposure ahead of this week’s wave of Canadian economic data releases? The first of these data items just came out (Canadian Manufacturing Shipments data for June) and the numbers came in negative again month-over-month (-1.2%), but they were not as bad as expected (-1.8%). This somewhat positive news, along with another failed attempt by traders to hold gains above the 1.3330s in the last hour, is now inviting some USDCAD sales back into the market.
OCT CRUDE OIL DAILY
Euro/dollar continues on the backfoot this morning after traders gave up attempts to hold the 1.1100 level yesterday. The German bund yield has given up yesterday’s bounce and is now trading back towards -0.70%. The overnight news flow has been rather quiet out of Europe today and so perhaps we see another fight at the 1.1100 level or an extension down to the next trend-line support level at 1.1050.
DEC GOLD DAILY
The Brexit headlines have been plentiful today and the sterling market doesn’t like it one bit. British PM Boris Johnson apparently sent a letter to the EU demanding that the Irish backstop be removed in order for the UK to ratify is stalled EU divorce treaty, however European Council President Donald Tusk rejected Johnson’s demand saying that it came with no “realistic alternatives”. More here from the Financial Times. This news, along with yesterday’s failure on the part of traders to hold gains above chart resistance in the 1.2150s on two occasions, is now seeing GBPUSD fall below the 1.2100 figure in our opinion. The next support level lies in the 1.2040s and we think the market could revisit it soon should EURUSD traders decide to keep selling in NY trade today.
The RBA released the Minutes from its last policy meeting last night and it appears market participants might have been a bit too negative heading into the release. We didn’t really come across any new “news” in the commentary (RBA would consider further policy easing if needed & expect extended period of low interest rates) and so AUDUSD rallied higher in the aftermath. Half of this overnight move higher has fizzled out in European trade now though, as traders observe broad USD buying against EUR, GBP and CAD. We think AUDUSD continues to pivot around the familiar, down-ward sloping trend-line that has been in play since last week (now in the 0.6770s). See purple line on chart.
SEP COPPER DAILY
Dollar/yen is pulling off yesterday’s NY highs so far today as global yields collectively slump lower today. There doesn’t appear to be any specific rhyme or reason behind it but the downward trend in global yields continues to be strong. With no major US economic releases scheduled for today’s NY session, we think USDJPY could very well chop sideways or drip a little lower.
US 10YR BOND YIELD DAILY
Charts: TWS Workspace
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