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Slow dancing dollar grinds lower
Michael O’Neill
FX Trader, Loonieviews.net
Summary: The US dollar is grinding lower in slow dancing, low tempo moves. Traders are timidly optimistic and hoping for a risk-seeking rally to fuel G-10 currency gains against the US dollar.
This mood music follows somewhat positive comments on Sunday, by White House Economic Advisor Larry Kudlow about the progress in the US/China trade talks.
EURUSD inched higher since New York opened with the break above 1.1255 suggesting further gains to 1.1330. European Central Bank (ECB) President Mario Draghi was at his dovish best on March 7 when he pushed out the timing for the next rate hike and confirming another round of Targeted Long-term Refinancing Operations. He is very unlikely to be more dovish sounding this Wednesday, which may give scope for further EURUSD gains.
Today’s Canadian Housing Starts data helped to undermine USDCAD which was already under pressure from surging oil prices. WTI oil prices extended Friday’s in New York trading which provided a much need layer of support to the Canadian dollar. Housing Starts climbed to 192,500 in March, well above February’s weather-related 166,300 result. USDCAD support is at 1.3310 and resistance at 1.3465.
USDJPY is trading just below its overnight low on the back of US equity market weakness while GBPUSD shuffles between 1.3030-70. There are reports that some pro-Brexit MP’s want to call a no-confidence vote in Theresa May while she is in Europe asking for another article 50 extension.
Wall Street opened in the red. Boeing’s (BA: NYSE) decision to scale back production of its 737 MAX aircraft is weighing on its stock which is down 4.37% in early trading. General Electric (GE: NYSE) got bad news from a JP Morgan analyst who downgraded the stock to “underperform” citing a drop in cash flow potential.
