The US dollar started the New York session with gains across the board. That contrasts with Friday’s choppy month end session, where the greenback finished mixed.
Asia trading got off to a slow start thanks to numerous national holidays including one in China.
The Bank of Japan’s Tankan Report pointed to continued moderate economic expansion and improvement in foreign and domestic supply/demand conditions. USDJPY climbed steadily, rising from 112.37 to 113.04 before retreating ahead of the New York open, supported by firmer Treasury yields.
The antipodean currencies were under pressure from the broad US dollar strength. AUDUSD dropped to 0.7796 from 0.7846 with the move below 0.7800, a bearish development. NZDUSD fell from 0.7224 to 0.7169.but remained above support.
EURUSD did not have a good session. The Spanish government’s ham-fisted handling of the Catalonia referendum put downward pressure on the currency. So did, the US rate hike outlook and treasury yields. EURUSD dropped to 1.1731 from 1.1814. A move below 1.1710 targets 1.1580.
Sterling is trading at the bottom of its overnight range. GBPUSD dropped from 1.3400 to 1.3302, undermined by Conservative Party infighting at heir annual conference, broad US dollar strength and weaker than expected September Manufacturing PMI. (Actual 55.9 vs. forecast 56.4)
The strong dollar and lack of fresh North Korea rhetoric have taken the shine off of gold prices XAUUSD closed at $1,279.50 on Friday and is now trading at $1.273.70.
Oil prices snapped a month-long uptrend this morning when prices broke below $51.35/barrel and dropped to $51.74. An International Energy Agency, Storage Market analyst, warned of a build in supply in 2018.
USDCAD rallied in concert with the other majors. With prices supported by the drop in gold and oil prices as well as pared back Bank of Canada rate hike expectations.
September ISM Manufacturing data (forecast 58.8, unchanged from August) could provide additional US dollar support if it is higher than forecast. There isn’t any other data of note. Eurozone developments, UK politics and technicals will drive currency markets today.
USDCAD Technical outlook:
The intraday technicals are bullish above 1.2450 looking for a break of resistance at 1.2550 to extend gains to 1.2740. Prices need to move below 1.2440 to negate the bullish sentiment. For today, USDCAD support is at 1.2480 and 1.2440. Resistance is in the 1.2535-50 area and then 1.2620.
Today’s Range 1.2480-1.255
Chart: USDCAD hourly