The Canadian dollar traded quietly in an uninspiring overnight session. There was a lack of top-tier economic data from Asia, the Euro area, and the U.K., leaving traders to seek inspiration elsewhere. They found it on Wall Street, where Tesla news and Facebook earnings underpinned global equity prices.
Positive risk sentiment got an added boost on news that U.S. Treasury Secretary Janet Yellen and China Vice Premier Liu He were talking about macroeconomic coordination, suggesting a thaw in the existing frosty relationship between the two countries.
USD/CAD drifted quietly in a narrow $1.2370-92 range overnight and opened at the bottom of that range. Prices fell in early New York trading, coinciding with steady S&P futures and a rebound in West Texas Intermediate (WTI) oil prices to the session peak of $84.08/barrel.
Crude prices got a boost after Russia’s oil minister expressed his support for leaving previously announced production quotas from the Organization of the Petroleum Exporting Countries (OPEC) unchanged. OPEC is expected to raise production by 400,000 barrels/day as of November 1, but the U.S. and other Western governments want higher levels.
Asia equity indexes closed with gains except for those in China. Another sizeable Chinese property developer defaulted on a debt payment that unnerved traders. It wasn’t all bad news. Chinese authorities are reportedly urging the Evergrande founder to pay debts with his personal wealth.
European equity indexes posted gains across the board led by a 0.92% rise in Germany’s DAX index. U.S. Equity futures are higher and suggest another positive open on Wall Street. The gains are partly due to a lower 10-year Treasury yield trading at 1.617%, down from 1.668% yesterday.
EUR/USD traded sideways in Asia then clawed out small gains in Europe due to lower Treasury yields and higher equity prices. However, trading volumes were light ahead of Thursday’s European Central Bank meeting and an empty economic data calendar. EUR/USD needs to break above $1.1650 or risk a retest of support at $1.1570.
GBP/USD climbed to $1.3828 from $1.3758. Prices are underpinned by expectations for a rate hike at next week’s Bank of England meeting, but gains were limited due to the renewed Brexit talks. European Union and U.K. trade officials are meeting in London today. Traders were also cautious awaiting the U.K. budget announcement on Wednesday.
Today U.S. data includes Consumer Confidence and the S&P Case Shiller Home Price index.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
