Loonie Dips, CAD Longs trimmed in BOC meeting
Summary: A ascend in Jobs in the United States in April at its highest level since december 2000 (when the series began) lifted the Dollar against her great peers. the United States Department of Labor monthly Employment Workforce openings and turnover survey (BLOWS), a measure of job application, increased to 9.3 million in April, a gain of nearly a million as of March. A favorite measured of US dollar value against one basket of 6 major currencies, the Dollar Index (USD / DXY) modestly amounted to 90.10 of 89.97 yesterday. the euro easy to 1.2173 (1.2192) in moderate trade. Sterling set 0.15% less than 1.4155 (1.4180). Against the Canadian loonie, the Dollar climbed to 1.2110 of 1.2077 yesterday. the Bank of Canada at its interest rate political meeting later in the day (noon to midnight, Sydney). the BOC was the first of the major central banks to tapering his urgency bond purchases. Markets will seek new guidance for the next policy change in the Canadian Central Bank. the Australian dollar (AUD / USD) has slipped 0.21% at 0.7739 (0.7758) while his little cousin from Tasman, the Kiwi (NZD / USD) lost 0.40% at 0.7195 (0.7234). USD / CNH (offshore Chinese dollar-yuan) rallied to 6.4015 of 6.3865, its highest close in 2 weeks. World treasury yields relaxed. the US 10-year bond yield set to 1.538% of 1.57% yesterday. The German Bund at 10 years reduced rate 3 basis points at -0.23%. 10-year Canadian bonds yielded 1.45% (1.47% yesterday).
Wall Street stocks bordered lower. the DOW set to 34,609 (34,628). the S&P 500 closed unchanged at 4.227.
Other Data released yesterday saw Average annual earnings in Japan go up to 1.6% in May, an upward revision April of 0.6% (from 0.2%) and exceeding estimates of + 0.8%. Japan’s first quarter GDP better expectations at -1.0% of -1.2%. Activity of the National Australia Bank of Australia Confidence index in May easy to 20 of that of April revised downwards 23. German industrialist Manufacturing (May) fell to -1.0%, missing median forecast at + 0.3%. the Eurozone Economic ZEW Sentiment index slipped in May to 81.3 of 84.0. Germany’s ZEW Economic Sentiment Index saw an impression less than 79.8 in May of 84.4 in April, disappointing estimates at 86.0. Canada’s trade balance improved to a surplus of +0.6 CAD billion May of April deficit of -1.3 billion CAD. Finally, the United States trade deficit in May easy to -68.9 billion USD of – $ 75.0 billion in April. the we NFIB Small Business Index slipped to 99.6 in May of April 99.8.
- EUR / USD – ended slightly lower against the US dollar significantly stronger at 1.2173 from yesterday’s 1.2193 open. The shared currency traded in a relatively narrow range between 1.21642 and 1.21941. With the ECB’s interest rate meeting tomorrow, there was little point in pushing the currency too far anyway.
- USD / CAD – The greenback rallied its 1.2075 open yesterday to close at 1.2109 in New York. Despite the rise in oil prices, the loonie ended up weaker against the overall stronger US dollar. No major changes are expected at tonight’s BOC policy meeting. On Friday, May employment in Canada lost -68,000 jobs, a disappointing forecast of -23,500.
- USD / JPY – edged up to 109.48 in New York City from 109.25 yesterday morning. The greenback managed to climb back to its overnight low of 109.198 despite a weaker 10-year US bond yield.
- USD / CHN – extended its rally to close at 6.4015, a gain of 0.25% and a new 2 week high. The dollar slumped to a low of 6.3518 earlier in the week following the lukewarm gain in US payrolls last week.
On the lookout: After another day of cautious and sluggish trading, markets are expected to pick up after tonight’s Bank of Canada policy meeting. While the US dollar managed to rebound to its lows yesterday, it still remains in the doldrums after Friday’s disappointing US payroll report. Tomorrow’s US inflation report for May should be stronger than expected to kick the heavy greenback off the ground. Meanwhile, today’s economic calendar just saw New Zealand’s first quarter manufacturing sales climb to 4.3% year-on-year from 2.1%. Later today, New Zealand releases its ANZ Business Confidence Index report (1.8 in April). RBA Deputy Governor Christopher Kent is due to speak at an online debt capital markets summit (9:30 a.m. Sydney). Australia follows with its Westpac consumer sentiment index which stood at -4.8% as well as Australian HIA new home sales in May (April -54.4%). Final Australian building permits for April follow (previously 18.9% – Finlogix). China follows with its May CPI report (year-on-year forecast at 1.6% vs. 0.9% – Finlogix). China is also releasing its May PPI report (year-on-year forecast at 8.5% vs. 6.8%). European data begins with the German trade balance for April (surplus expected at +16.3 billion euros against +14.3 billion euros in April – Finlogix). The Bank of Canada expected to keep its overnight rate at 0.25% after its policy meeting (12 midnight Sydney).
Commercial perspective: We can expect further consolidation within the usual trading ranges in Asia today. The dollar’s rally against its rivals has been sluggish to say the least. The greenback continues to trade with a feeling of sluggishness. That said, the current market positioning (COT report for the week ending June 1) is short on USD currencies / long IMM at a 12 week high (net total – $ 17.7 billion). We reported yesterday that speculators have extended their purchases in euros, Japanese yen and Canadian dollars. Against the pound, speculative long bets on the pound have been reduced. What will trigger these short USD bets for exits? Most likely a big gain in the US CPI on Thursday. Forecasts point to a lower number in May from April.
- EUR / USD – Trade in the shared currency has been moderate as we await the ECB policy meeting tomorrow. The easing of the yield on US 10-year bonds was matched by that of Germany. Most of the data from Europe disappointed yesterday (eurozone and German ZEW economic sentiment and German industrial production). EUR / USD closed at 1.2174 (1.2193 yesterday). The overnight high traded for EUR / USD was 1.2194. Immediate resistance is at 1.2200 followed by 1.2230. Immediate support can be found at 1.2160 (overnight low at 1.21642) and 1.2130. Look for a probable range today between 1.2150 and 1.2200. With long Euro specs, the preference is to sell rallies.
- USD / CAD – Ahead of the BOC meeting tonight, the spotlight is on the Canadian loonie. The Bank of Canada was the first of the major central banks to reduce its emergency bond purchases (April). Analysts expect BOC Chairman Tiff Macklem and his colleagues to leave their overnight rate at 0.25%. USD / CAD has immediate support at 1.2070 and 1.2040. Immediate resistance is at 1.2120 (overnight high at 1.21174) and 1.2150. Look for a probable trading range today of 1.2080 to 1.2130. Also keep an eye on oil prices. The preference is to buy dips, the BOC will not want the CAD to strengthen excessively, and the specifications are long for CAD bets. Tin helmets on that puppy tonight, we could be up for a wild ride.
AUD / USD – The Aussie retreated after hitting an overnight high of 0.77634, before sliding to close 0.25% at 0.7740. AUD / USD has immediate support at 0.7730 (overnight low at 0.77317) followed by 0.7700. Immediate resistance can be found at 0.7760 and 0.7790. Look for a probable trade between 0.7720 and 0.7770 today. Just swap the range shag on this one for now.
- GBP / USD – The pound fell slightly on the strength of the overall stronger US dollar to end at 1.4154 in New York. The British currency’s overnight low was 1.41209. Immediate support stands at 1.4120 followed by 1.4090. There is immediate resistance at 1.4180 (overnight high at 1.41847) and 1.4210. There is no major data release in the UK today, so the British pound will draw inspiration from the greenback. Look to trade a likely range of 1.4110-1.4190 today.
Happy Wednesday and exchange to all.