USD/CAD Open: 1.2049-53, Overnight Range: 1.2031-1.2066, Previous Close: 1.2063
WTI Oil is at $68.50 and gold is at $1,900.60. US markets are mixed today.
For today, USD resistance is at 1.2056. Support is at 1.1987.
• Canadian dollar may rally if March GDP is higher than forecast
• Eurozone data boosts EURUSD
• USD opens lower compared to Monday’s opening levels
The Canadian dollar traded choppily inside a narrow range overnight. Traders are looking ahead to today’s GDP report. The Canadian economy is expected to have grown 1.0% m/m or 6.7% y/y in March. Better than expected data should lead to Canadian dollar demand while a weak report will undermine the currency.
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Overnight, FX markets churned inside well-defined ranges. The Asia equity indexes closed on a mixed note. Chinese stocks posted gains while Japan and Australian indexes were closed with small losses. European bourses are higher, thanks to better than expected Euro area data, while S&P futures point to a positive open on Wall Street.
West Texas Intermediate (WTI) oil, the North American benchmark for crude rallied sharply, climbing from $66.92/barrel to $68.39/b. Traders expect that OPEC will confirm that they will stick to their schedule for phasing out production cuts. OPEC believes that new production from Iran will not disrupt the market.
EURUSD is trading with a bid tone in a narrow 1.2214-1.2241 range. Eurozone inflation rose 2.0% y/y in May, up from 1.6% y/y in April. CPI is now at the ECB target rate for inflation. German and Eurozone employment data improved which provided additional support for the single currency. The EURUSD uptrend is intact above 1.2130, a level guarded by support at 1.2205.
GBPUSD rallied in Asia, then dropped in Europe, falling from 1.4249 to 1.4168 after the UK Final May Manufacturing PMI was lower than previous (actual 65.6 vs previous 66.1). Still the result is bullish. The CIPS statement noted, “Conditions in the manufacturing sector improved at an unprecedented rate in May, as output growth strengthened, and new orders rose at the quickest pace in the near three-decade survey history.” The intraday GBPUSD technicals are bullish above 1.4150.
USDJPY rallied from 109.40 to 109.67, supported by the rise in US 10-year treasury yields. USDJPY gains are facing headwinds due to inflation differences between Japan and the US. There is no inflation in Japan, meaning that Japan offers a higher real yield than the US.
The Reserve Bank of Australia left monetary policy unchanged. The OCR rate is unchanged at 0.10% and reiterated that rates will remain unchanged until 2024. AUDUSD danced between 0.7732 and 0.7767 and is trading at the overnight low. NZDUSD tracked AUDUSD lower.
US ISM Manufacturing PMI, Dallas Fed Manufacturing Business Index, and Construction spending are due.
Today’s Suggested Range USD/CAD: 1.1980 – 1.2080
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