US dollar retreat becomes rout
USDCAD Open (6:00 am) 1.2830-34 Overnight Range 1.2817-1.2932 16Aug.16
NOTE: This chart represents gain (or loss) of G10 currencies vs. the US dollar from NY close (4::00pm) to NY Open Aug 16, 6:00 am EDT
The US dollar scrambled in full retreat against the majors in Europe after a slow start in Asian. AUDUSD started off the session with an offered tone but that changed in the run-up to the RBA minutes. The minutes were described as confusing but implied a reduced risk of additional rate cuts which gave AUDUSD a lift. Kiwi followed suit.
A report by San Francisco Fed President, John Williams, that called for higher inflation targets suggesting that “higher inflation targets would imply a higher average level of interest rates and thereby give monetary policy more room to maneuver” continued to bearish USDJPY sentiment. USDJPY traded below 100.00 in early New York trading.
The soft USDJPY profile helped lift EURUSD through resistance at 1.1230. The ZEW survey helped. In Germany ZEW Current situation rose to 57.6, beating the forecast of 50.0 while Economic Sentiment was 0.5, the prior result was -1.8. Even GBPUSD recovered from its lows aided by better than expected CPI data but the rally wasn’t enough to get Sterling above the 1.3000 level.
Global equity indices closed or are still sitting in the red as are New York equity futures. Gold bulls like the weak dollar and pushed gold prices up over $12.00/oz. WTI oil prices continued to climb buoyed by the weak dollar and optimistic sentiment ahead of the Opec meeting at the end of September.
The Canadian dollar is basking in the glow of general negative US dollar sentiment and rising oil prices. Last week’s bullish USDCAD sentiment has turned bearish with this morning’s decline through support in the 1.2830-40 area.
There is a lot of US data today, that if it disappoints, will fuel sentiment of lower US rates for longer, and further undermine the greenback.
USDCAD technical outlook.
The intraday USDCAD technicals are bearish while trading below 1.2910 and supported by the break of the 1.2830-40 area which sets up a test of the 1.2760 level, representing the 61.8% Fibonacci retracement level of the May-July range. For today, USDCAD support is at 1.2805 and then 1.2760. Resistance is at 1.2840 and 1.2880
Today’s Range 1.2760-1.2860