– Lower Treasury yields give equity markets a lift.
– Weekly jobless claims and US Durable Goods Orders ahead.
– USD dollar opens mixed after giving back some gains.
USDCAD: open: 1.3542-46, overnight range: 1.3511-1.3550, close 1.3525, WTI $79.17, Gold $1919.27.
The Canadian dollar looked like it was going to fall into an abyss yesterday. It didn’t happen. The currency got a reprieve after falling US Treasury yields boosted equity markets, turning risk sentiment positive.
USDCAD gnawed away at resistance in the 1.3580-1.3600 area before dropping to 1.3521 just after lunch, then consolidated the losses for the rest of the session.
The Canadian dollar shrugged off falling oil prices. West Texas Intermediate dropped from $80.90 on Tuesday to $77.66 yesterday mainly because of the firm US dollar. WTI rallied to $79.41 after the Energy Information Administration (EIA) reported that US crude inventories shrank by 6.13 million barrels in the week ending August 18. However, the rally stalled overnight following reports that the Biden Administration is considering easing restrictions on the import of Venezuelan crude oil.
The improvement in risk sentiment found its way into Asian equity markets. Hong Kong’s Hang Seng Index rallied 2.05%, while Japan’s Nikkei 225 index gained 0.87%. European bourses followed suit, led by a 0.41% gain in the French CAC 40 index, while the German Dax gained 0.33%. S&P 500 futures are modestly lower.
Gold bulls are trying to regain the upper hand and put the August decline behind them. XAUSUD bottomed out at $1885.00 on August 21 and snapped the downtrend with the break above $1910.00 today. The rally was sparked by the drop in the US 10-year yield to 4.18% yesterday.
Traders are awaiting this morning’s weekly jobless claims numbers, which are expected around 240,000. In addition, July Durable Goods Orders are expected at -4% compared to the 4.6% gain in June.
FX traders are sidelined, with the major currency pairs trading quietly.
EURUSD is at its session low after trading in a 1.0845-1.0876 range. The lack of data and caution ahead of Fed Chair Powell’s speech from Jackson Hole has curbed enthusiasm.
GBPUSD moves are mimicking those of the single currency, and it is trading with a negative bias in a 1.2656-1.2728 band.
USDJPY traded narrowly in a 145.47-145.69 range, with direction determined by US Treasury yields.
AUDUSD is on the defensive and trading at the bottom of its 0.6435-0.6487 range, weighed down by China’s weak economic growth outlook.