USD/CAD Open: 1.3419-23, Overnight Range: 1.3372-1.3436
WTI Oil is at $39.72 and gold is at $1,985.30. US markets are mixed today.
For today, USD resistance is at 1.3443. Support is at 1.3329.
The Canadian dollar opened unchanged in Toronto, compared to yesterday’s close. EURUSD and GBPUSD rallied, but the Canadian dollar did not join the party. The domestic currency may be suffering from the perception that poor economic performance in the US will weigh heavily on Canada’s post-pandemic rebound. Weak oil prices may also be weighing on the Canadian dollar. Canada’s economic performance will take center stage today. May GDP made a rebound by 4.5% m/m from April’s 11.6% plunge. This has caused the Canadian dollar to strengthen from yesterday’s level. Additional demand may come from portfolio managers. US stock market performance in July suggests a need to buy Canadian dollars today.
OPEC and Russia announced emergency crude production cuts of 2.2 million barrels/day in April, to shore up oil prices. The move was successful as West Texas Intermediate (WTI), the North American benchmark price, rose from -$37.63 at one point in April, to $42.34 in the middle of July. Prices have flitted between $39.30-$42.34 since.
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FX markets were topsy-turvy overnight. EURUSD and GBPUSD gave back most of their Asia gains during the European session. AUDUSD and NZDUSD lost ground, and USDCAD opened unchanged. The size of the US dollar losses in July, combined with waning month-end portfolio rebalancing flows and renewed coronavirus concerns, limited FX action.
China Non-manufacturing PMI at 54.2 was better than forecast but a tad worse than the 54.4 reported. The positive China data underpinned AUDUSD and NZDUSD, but gains were erased in Europe.
EURUSD climbed steadily in Asia rising from 1.1846 to 1.1908 in early European trading. Prices continue to be supported by the dovish FOMC outlook, rising coronavirus cases, and failure to pass another stimulus bill to replace the CARES Act. Reality intruded when Euro area Q2 GDP was -12.1% q/q. The drop was expected, but it served to remind EURUSD bulls the Eurozone economy was a long way from pre-pandemic levels.
GBPUSD is ready to close out July as the best performing-G-10 currency. Prices extended yesterday’s gains, rising from 1.3088 to 1.3143. There were not any announcements about a break-through in EU/UK trade talks, and there were not any blow-out UK economic data reports. There is some talk that the bulk of the GBPUSD rally this week is due to month-end portfolio rebalancing flows.
US Michigan Consumer Sentiment and Chicago Purchasing Manager Index is due today.
Canada is closed Monday,
Today’s Suggested Range USD/CAD: 1.3370 – 1.3470
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