NY Open: How do you spell 'relief'?
US economic reports were a mixed bag. Initial Jobless Claims and Building Permits beat expectations while Housing Starts and the Philadelphia Fed Manufacturing Index missed the mark. Forex traders weren’t bothered either way. Instead, they saw the resumption of China/US trade talks as good for global growth.
USDCAD is ignoring the shift to risk seeking trades and the broad US dollar weakness. Prices are supported by today’s soft Manufacturing Shipments data (actual 1.1% versus May 1.5%, m/m). In addition, US National Economic Council Director Larry Kudlow said that the US has almost secured a trade deal with Mexico in a CNBC interview this morning.
That doesn’t bode well for Canada, as it has been excluded from recent talks.
EURUSD, GBPUSD, and the Antipodean currencies have all risen since New York opened. The Swiss franc and Canadian dollar are flat to slightly lower, respectively. EURUSD bulls are starting to smile as the single currency bounced off support in the 1.1290-1.1305 area. The subsequent rally is targeting resistance at 1.1430, which if broken would suggest a short-term bottom is in place and point to further gains to 1.1540. A higher than expected Eurozone CPI print tomorrow could be the catalyst.
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