The Canadian dollar had a choppy 24- ours. Prices bounced between $1.2568 and $1.2644 yesterday, then traded erratically inside that range overnight.
The Canadian dollar reacted negatively after Canada’s June Gross Domestic Product was sharply weaker than expected. Q2 GDP fell 1.1% q/q rather than rise 2.5% q/q. The domestic economy did not weather the COVID-19 third-wave outbreak as well as analysts anticipated. The results suggest slower domestic growth ahead.
The Canadian dollar sank on the weaker GDP news, but the move was short-lived. Prices rebounded as risk sentiment improved.
Asia equity indexes closed with gains and a 1.38% rise in the French CAC 40 index is leading European bourses higher. S&P 500 and DJIA Futures point to a positive open on Wall Street today. US 10-year Treasury yields climbed to 1.321% from 1.277% yesterday. Gold and oil prices are a touch firmer.
The Organization of the Petroleum Exporting Countries and friends are meeting in Vienna today. They are widely expected to confirm another 400,000-barrel increase in oil production, which was pre-announced. Oil traders are hoping that the weaker than expected China Caixin Manufacturing Purchasing Managers Index report is just due to supply issues and not evidence that oil demand will slow.
EUR/USD rejected a move above $1.1850 yesterday and retreated to $1.1795 overnight. Prices have risen to 1.1820 in early New York trading, supported by a mild improvement in risk sentiment and talk that the European Central Bank may make a tapering announcement at next week’s meeting. Eurozone July unemployment dipped to 7.6% m/m which was offset by June’s results being revised higher to 7.8%. Eurozone Manufacturing PMI was a tad softer than expected, but it was due to supply issues.
The EUR/USD technicals are bullish above $1.1770.
GBP/USD traded in a $1.3733-$1.3765 range and is near the top in New York trading. Prices got a bit of support from U.K. Manufacturing PMI data. GBP/USD needs to break above 1.3800 or risk further $1.3650-$1.3750 consolidation.
AUD/USD rallied from $0.7310 to $0.7348 on improved risk sentiment, and after Australia, GDP rose 9,6% y/y compared to the forecast of 9.2% y/y. The news is surprising due to the recent COVID outbreak in the country.
U.S. Institute for Supply Management Manufacturing, Construction Spending and ADP employment are due today.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians