US Dollar perky ahead of FOMC statement

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.

Enlarge
USDCAD daily with Fibonacci retracement levels (source: Saxo Bank)

Access both platforms from your single Saxo account.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)