FX sidelined due to data drought
The canines are barking already and the dog days of summer are still a month away. FX traders are mulling over the G-20 statement. They expressed concern about trade tensions and reaffirmed their commitment to avoid competitive currency devaluations. Nothing new there, except traders are still a tad leery after Trump’s comments on Friday, complaining about weak currencies taking advantage of the US.
Wall Street opened with small losses because of negative trade chatter. Tech stocks are a tad lower while energy stocks are a bit higher. Weaker than expected US existing home sales (actual -0.6% vs forecast 0.5%, m/m) won’t help sentiment.
EURUSD opened just above the overnight low of 1.1688, traded to 1.1725 and is now hovering just above 1.1700. Traders are cautious ahead of Thursday’s European Central Bank meeting. EURUSD is in a minor uptrend above 1.1680, looking for a break above 1.1760 to extend gains to 1.1850. A break below 1.1680 suggests further losses to 1.1610.
USDJPY has bounced off support at 1110.75 and is trading at 111.30. US 10-year Treasury yields are up 1.02% to 2.923%, which has served to offset Bank of Japan easing concerns. USDJPY is in an uptrend while prices are 110.40. However, a break above 111.50 is needed to shift the focus from the downside to 112.00.
The Organization for Economic Cooperation and Development had some advice for Canada. They suggested Canada lower corporate taxes to offset trade risks. FX markets ignored the advice. USDCAD continued to consolidate Friday’s gains, trading in a 1.3116-1.3159 range.
WTI oil prices have held on to European gains and are trading at $68.83/barrel. The price boost is courtesy of President Trump who tweeted another threat to Iran. He appeared serious because the tweet was all uppercase.
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