US Dollar perky ahead of FOMC statement
FX Trader, Loonieviews.net
The US dollar is perky. The ADP employment change posted a 219,000 gain in jobs, handily beating the 185,000 that was forecast. The greenback inched higher on the news, despite a poor correlation between ADP and NFP results. The rest of this morning's US data releases were a tad weaker than predicted. ISM Manufacturing PMI was 58.1. It was expected to decline to 59.5 from 60.2 in May, but the miss is not likely to have any impact on the Federal Open market Committee deliberations today.
President Trump’s threat to increase Chinese tariffs to 25% from the previously announced 10% rate was greeted with a collective yawn by Wall Street. The tariffs couldn’t go into effect until August 31 at the earliest, so for now, the threat is seen as trade bluster. Wall Street is trading in positive territory, for now.
The US dollar is modestly higher against the major G-10 currencies. USDJPY continues to hover around the 112.00 area supported by bullish technicals and US 10-year Treasury yields above 3.0%.
GBPUSD is bouncing aimlessly within a narrow trading band. Traders are conflicted by the Brexit and the Bank of England. The BoE is widely expected to raise rates 0.25%, but there is fear that ongoing trade issues and rising risks for a “hard” Brexit would result in a dovish-sounding monetary policy statement.
EURUSD is weighed down by concerns that the Fed could hint at a faster pace of rate increases in today’s statement.
USDCAD traders have concluded that the recent string of strong economic reports, including yesterday’s May GDP 0.5% result outweigh Nafta risks. Bloomberg reported that Mexico and the US were close to a deal on autos, but Canada was not invited to the meeting. The USDCAD technicals are bearish. The break below 1.3150 on July 24 followed by the move below 1.3050 targets further losses to 1.2850, the 61.8% Fibonacci retracement level of the April-June range.
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