FX & market recap:
The US dollar went for a wild, roller coaster ride overnight, but the action is just noise. The greenback opened on a mixed note compared to yesterday’s closing levels but is well above yesterday’s NY opening levels. The Canadian dollar is the exception-it is unchanged.
Gold (XAUUSD) was the star of the show. Prices plunged from $1911.62 to $1863.50 in Asia. Prices have dropped 10.2%, peak-to-trough since last Thursday. Opportunistic traders took advantage of the move to reload positions. Fibonacci fans will have noticed that the XAUSUD plunge from August 6, stopped right at the 76.4% retracement level of the July 17-August 6 range.
Canadian dollar highlights:
USD/CAD tracked antipodean moves, and by the time NY opened, it was unchanged from where it opened on Tuesday. Price action continues to be at the mercy of US dollar sentiment and not domestic issues. US CPI is expected to rise 0.3% in July and unlikely to impact FX. Oil prices firmed on the back of US dollar weakness and news of another decline in US crude inventories.
Euro highlights:
EUR/USD revered Asia losses and rallied from a low of 1.1712 to 1.1774 in early NY trading. Risk sentiment improved alongside Eurozone equity and S&P futures gains. Risk seeking traders are still clinging to hopes that the US Congress will enact another stimulus plan. President Trump musing about capital gains tax cuts didn’t hurt.
British pound highlights:
GBP/USD ignored a rash of economic data well bouncing in a 1.3019-1.3066 range. The UK economy suffered its worst recession ever with Q2 GDP falling 21.7% y/y. The news was well-telegraphed, expected, and therefore ignored. June Industrial Production and Manufacturing data were a tad better than expected.
Asia Pacific highlights:
USD/JPY continues to be underpinned by rising US Treasury yields and higher Nikkei 225 prices. 10-year US Treasury Yields climbed to 0.673% from 0.638%, which helped take USD/JPY from 106.46 to 106.88.
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