USD/CAD Open: 1.2478-82, Overnight Range: 1.2445-1.2481, Previous Close: 1.2453
WTI Oil is at $75.27 and gold is at $1,806.70. US markets are lower today.
For today, USD resistance is at 1.2544. Support is at 1.2491.
• Canadian dollar consolidating ahead of US data
• Chinese Trade data gives hope for global recovery view
• US dollar lower vs commodity currency bloc
The Canadian dollar is in limbo, along with the other G-10 major currencies. Headline US June inflation is expected at 4.9% y/y and core inflation at 4.0%. Fed officials, including Chair Jerome Powell, insist that the high inflation numbers are transitory and due to pent-up demand and bottle-necks as the US economy reopened.
Other economists are not so sure. The Wall Street Journal surveyed sixty-four business, academic, and financial forecasters between July 2 and July 7. They do not see inflation levels falling any time soon. Instead, they predict core inflation will be up 3.2% in Q4 2021.
Risk sentiment got a boost, albeit briefly, from better than expected Chinese trade data. The June Trade balance increased from $45.53 billion to $51.5 billion. Imports rose 36.7% (forecast 30%) and Exports increased 32.2% (forecast 23.1%). Chinese authorities tempered the euphoria from the data by noting many uncertainties expected in the second half due to the lingering effects of the pandemic.
Asia equity indexes closed higher, except for Australia’s ASX 200 index. Aussie traders were spooked by Goldman Sachs analysts reducing their GDP forecast to 0.5% from 1.0% because of the resurgence of COVID-19 in Sydney and other areas.
European bourses are largely unchanged as are S&P 500 futures. Oil and gold prices have nudged higher, while 10-year Treasury yields are unchanged.
EURUSD rallied in Asia, then fell from 1.1874 to 1.1837 in NY trading, in part due to expectations for a robust US inflation report. The single currency continues to be weighed down by expectations for another dovish tilt at next week’s ECB meeting, even as the Fed turns hawkish. The final reading for June German inflation data was confirmed at 2.3% y/y , and ignored.
GBPUSD is trading at the bottom of its 1.3840-1.3904 overnight range. Traders are biding their time until Wednesday’s UK CPI, PPI, and Retail Price Index data.
WTI oil prices are firm due to Opec’s failure to agree to new production quotas. The cartel isn’t expected to meet again until August, which may increase prices further as demand increases.
The Canadian dollar is tracking broad US dollar moves, but firm oil prices limit the downside.
There are not any Canadian economic reports available today.
Today’s Suggested Range USD/CAD: 1.2450 – 1.2550
