- Chinese Services PMI data weighs on commodity currencies
- Minutes from June 14 FOMC meeting due today.
- US dollar opens with a modest bid.
USDCAD snapshot: open 1.3270-74 overnight range 1.3222-1.3291, close 1.3223, WTI $71.27, Gold $1929.13.
The Canadian dollar took a tumble overnight as the Caixin China Services PMI index was reported at 53.9 in June, below the forecast of 56.2 and well below the 57.1 reading in May. Although business activity and new orders expanded, the pace was notably slower in May, providing further evidence that China's post-pandemic economic rebound is faltering. The news drove the commodity currency bloc lower.
Global risk sentiment also soured as US and Chinese trade frictions worsened. The Americans announced steps to limit the sale of semiconductors and chipmaking equipment to China, and then escalated the effort by planning to limit access to cloud services by Chinese companies. Beijing retaliated by imposing export restrictions on gallium and germanium products, key minerals used in making semiconductors and electric vehicles. China is the world's biggest exporter of these minerals.
Meanwhile, Ukraine officials are accusing Russia of plotting to sabotage the Zaporizhzhia Nuclear plant, which Russia denies.
West Texas Intermediate (WTI) rose as traders embraced the latest Saudi Arabia and Russian production cuts. WTI rose from $69.93/barrel in Asia to $71.33/b in NY trading today.
The FOMC minutes are scheduled for release this afternoon, and analysts will scour the pages to see if the rate debate was as hawkish as the statement.
EURUSD traded in a 1.0867-1.0907 range and is in the middle of that band in NY trading. Eurozone and German Services PMI data reports were softer than expected, but the results did not have a lasting impact on EURUSD.
GBPUSD is trading at the bottom of its 1.2690-1.2721 range, with the downside vulnerable to further losses if traders continue to believe the Bank of England's rate hike outlook is too aggressive.
USDJPY is trading with a negative bias in a 144.22-144.73 range, with Japan Services PMI not being a significant factor.
AUDUSD dipped to 0.6660 from 0.6697 following the soft Chinese Caixin Services PMI and weak domestic Services PMI (actual 50.3 vs previous 50.7). AUDUSD is also suffering from the RBA decision to leave interest rates unchanged at its July 4 meeting. RBA Governor Phillip Lowe indicated the decision was just a pause and did not rule out additional hikes.
There are no US or Canadian economic reports of note.
