Quiet FX markets await fresh catalysts. US May PPI on deck.

SUMMARY

ANALYSIS

USDCAD

Directionless range trading continues for USDCAD this morning after a very quiet session yesterday.  Selling volatility seems to be in order after last week’s swift move lower and odds are market conditions will remain this way until the US reports its May CPI numbers tomorrow.  The broader USD had an uneventful day yesterday as well and now trades mixed to slightly lower as NY trading gets underway today.  July crude oil prices are bouncing a tad this morning with the uptick in the S&P futures; gold prices have extended losses below key support at the 1333 level and the December Eurodollar interest rate futures have fallen back below the physiological 98.00 level.  There seems to be a nervous calm in the air on the US/China trade front as President Trump and China’s President Xi Jinping speak kindly about one another ahead of the G20 this month in Japan, where they’re both expected to meet.  We think USDCAD still remains in the pits technically and may need to fall lower still before bouncing.

USDCAD DAILY

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JUL CRUDE OIL DAILY

EURUSD

EURUSD DAILY

EURUSD HOURLY

AUG GOLD DAILY

GBPUSD

Sterling is enjoying a slight out-performance compared to its G7 peers this morning as the UK reported healthy wage growth in its May employment report this morning.  While the unemployment claimant count rose slightly more than expected (23.2k vs 22.9k), wages rose +3.1% 3M/yr vs +3.0% expected, and when you combine this news with some hawkish commentary from the BOE’s Saunders, we have a small GBPUSD rally on our hands.  The upward momentum is lacking however as the broader USD remains quiet, but GBP bulls might find some comfort with the fact that EURGBP continues to struggle with the 0.8900 handle.  The final candidate list for the UK’s Tory leadership race has now been confirmed.  See here for a nice summary of the 10 individuals who are now running to replace Theresa May.

GBPUSD DAILY

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EURGBP DAILY

AUDUSD

It’s been a very quiet 24hrs of trade for the Australian dollar as the broader USD remains quiet since the start of NY trade yesterday.  The market has slipped below trend-line support in the high 0.6950s and EURUSD recedes from the 1.1320s.   July copper prices have shot up 1% today in sympathy with the supply concerns that are driving Dalian iron ore futures through the roof today.  More here.  Australia reported a mixed NAB Survey for May last night (7 vs 0 prior for Business Confidence but 1 vs 3 prior for Business Conditions, which is a six year low).  Tonight’s Asian session will feature a speech from the RBA’s Kent, followed by the Westpac Consumer Confidence numbers for June and China’s May CPI.  We think AUDUSD could find some upward momentum with a move back above the 0.6950s. 

AUDUSD DAILY

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JULY COPPER DAILY

USDJPY

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USDJPY HOURLY

JUN S&P 500 DAILY

Charts: TWS Workspace

About the Author

Erik Bregar - Director, Head of FX Strategy

Erik works with corporations and institutions to help them better navigate the currency markets. His desk provides fast, transparent, and low cost trade execution; up to the minute fundamental and technical market analysis; custom strategy development; and post-trade services -- all in an effort to add value to your firm’s bottom line. Erik has been trading currencies professionally and independently for more than 12 years. Prior to leading the trading desk at EBC, Erik was in charge of managing the foreign exchange risk for one of Canada’s largest independent broker-dealers.

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