NY Open: Holidays, heatwave sap FX energy

Michael O’Neill

FX Trader, Loonieviews.net

When London FX is away, US FX is reluctant to play. That is indeed the case this morning. A nasty heat wave triggering heat warnings from New York to Montreal and parts in between may have stifled enthusiasm as well. 

Wall Street is showing resilience. Three major indices opened with gains. Prices are supported by talk of a US/Mexico trade deal being announced today as well as a lack of US political or Jackson Hole drama over the weekend. The only economic data was the US Dallas Fed Manufacturing Business Index which was as forecast.

EURUSD traded higher in a thin market, rising from 1.1605 to 1.1656 where it is trading at 1400 GMT. The intraday uptrend from last week is intact while prices are above 1.1590. A break of longer-term downtrend resistance at 1.1690 would target 1.1750. Traders are looking ahead to Wednesday US GDP, Thursday’s US PCE Index data and Friday’s Eurozone employment and inflation reports.

WTI oil prices have climbed from $68.55/barrel to $65.82/b in early trading, supported by a Reuters article claiming that Opec /non-Opec producers cut production by 9% in July. 

The Canadian dollar is up modestly, supported by the talk of an imminent US/Mexico trade deal announcement. USDCAD could decline on the news, but until there are details as to how the agreement will affect Canada, it should be tough for support at 1.2960 to be broken.

The Mexican peso has performed admirably; USDMXN dropped from 18.8330 to 18.6650 on the news.
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USDMXN (source: Saxo Bank)

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