- Negative risk sentiment boosts greenback
- US inflation and Canada jobs data ahead
- US dollar opens higher across the board
USDCAD Snapshot: open 1.2737-41, overnight range 1.2683-1.2736, close 1.2699, WTI open $122.13, Gold open $1,842.61
The Canadian dollar was beaten badly yesterday, falling 1.41% against the US dollar, and the move was entirely due to external factors.
USDCAD was happily probing support in the 1.2530-50 zone Thursday until the release of the US weekly jobless claims data and while the European Central Bank press conference was occurring. Traders did not like what they had seen and heard.
US jobless claims rose to their highest level in five months, rising 27,000 to 229,000. Traders viewed the results as a sign the US economy was cooling. Stocks inched lower and the US dollar caught a bid.
At the same time, ECB President Christine Lagarde’s press conference was in full swing. The ECB pre-announced a July 21 rate hike and left the door open to a similar move in September. Some analysts are predicting a 0.50% hike at that time. Nevertheless, there was enough ambiguity in Ms Lagarde’s comments that suggested the newly hawkish ECB will greatly lag rate increases in the US.
EURUSD dropped from 1.0770 to 1.0573 in NY today.
Today’s US May inflation report is the major focus and concerns the results will be higher than expectations has fueled US dollar gains. May CPI is expected to rise 0.7% m/m while Core-CPI will climb 0.5% m/m.
The US dollar also attracted safe-haven demand after Russia President Putin hinted his goal was to reclaim all Russia lands. Its not clear if he just meant Ukraine or if he was referring to the countries of the former USSR.
GBPUSD dropped from 1.2555 Thursday to 1.2438 in NY today due to broad US dollar strength on anticipation of another robust US inflation report.
USDJPY traded in a 133.37-134.47 range with gains from rising Treasury yields and the US inflation outlook, offset by safe-haven demand following Putin’s speech.
AUDUSD and NZDUSD dropped Thursday but found a bottom in Asia and squeezed out small gains. Both currency pairs were underpinned by higher commodity prices and the news that shanghai ports have fully reopened.
Canada’s May Labour Force Survey is expected to report a gain of 30,000 jobs and the unemployment rate unchanged at 5.2%. The news will take a back seat to the US inflation data.
Michigan Consumer Sentiment Index is expected at 58.0 (May 58.4).
