Canadian Dollar Sinks on Soft Oil Prices
The Canadian dollar started sinking yesterday and it nearly submerged in overnight trading. USDCAD rallied from 1.2534 to 1.2587 before it started to recoup those losses in the European session, supported by an uptick in crude prices.
Asia markets were busy. Rising Treasury yields and an uptick in the Nikkei. Lifted USDJPY from a low of 110.31 to 110.91.
The New Zealand dollar got hammered by a weaker than expected employment report. The Q2 NZ employment change was forecast to rise 0.7 percent. It didn’t. Employment only gained 0.2 percent and NZDUSD tanked, falling from 0.7472 to 0.7418.
AUDUSD was mostly unscathed. It bounced inside a 0.7943-0.7972 band although topside resistance was fortified by softer commodity prices.
Weaker than expected Eurozone Producer Price data revered a EURUSD rally that began in Asia. Eurozone PPI for June came in at 2.5 percent, well below the 3.4 percent recorded in May. EURUSD dropped from 1.1867 to 1.1830.
GBPUSD is still elevated, supported by mild expectations of a rate hike on Thursday. It traded in a 1.3192-1.3244 range while ignoring a fall in UK Construction PMI to 51.9 in July from 54.98 in June.
Oil prices were soft in Asia. The weekly API data reported a 1.8 million barrel rise in US inventories in the previous week. In addition, traders were still mulling reports that Opec production increased in July. WTI dropped from $49.10 to $48.58 but found a floor in Europe and is trading in New York above yesterday’s close.
US ADP employment data is out this morning, forecasting a gain of 185,000 jobs in July. Many traders see this report as a barometer for Nonfarm payrolls. The weekly EIA Crude report is also due. There are two Fed speakers on tap; Cleveland Fed’s Lorretta Mester and San Francisco Fed John Williams.
FX Ranges for major currency pairs