– New Chinese concerns unnerve traders.
– Data void today suggests quiet trading session.
– US dollar modestly higher against G-10 majors from Friday’s close.
USDCAD: open: 1.3443-47, overnight range: 1.3436-1.3470, close 1.3444, WTI $83.00, Gold $1914.12.
The Canadian dollar is currently consolidating its losses from last week in a quiet overnight session. Negative risk sentiment in Asia was fueled by news that a major Chinese wealth management company missed payments on some high yield instruments. This drive for safe-haven currencies has boosted the US dollar against the Australian, New Zealand, and Canadian dollars.
The Chinese news highlighted Beijing’s struggle to stimulate its sluggish economy, and this sentiment also weighed on oil prices. West Texas Intermediate (WTI) initially dropped from $83.07 per barrel to $82.00 but later recovered to $82.76 per barrel in New York trading. WTI’s downside is being constrained by the latest production cuts announced by OPEC and Russia.
The US dollar is being supported by the recent increase in the US 10-year Treasury yield, which rose from 4.10% to 4.17% on Friday due to slightly higher Producer Price Index (PPI) readings. However, the yield dipped slightly in New York trading today, eroding some of the US dollar’s support.
Asian equity indexes closed in the red, with Japan’s Nikkei 225 index losing 1.27% and Australia’s ASX 200 falling 0.86%. In contrast, European bourses are trading slightly higher, except for the UK FTSE 100 index which is down 0.44%. S&P 500 futures are showing a positive trend with a 0.12% gain.
EURUSD is recovering from Friday’s losses and fluctuating within the range of 1.0927 to 1.0960. German Wholesale Price Index data met expectations and had minimal impact. Traders are anticipating a 25 basis point rate hike from the Norges Bank on Thursday.
GBPUSD traded within a range of 1.2667 to 1.2714. Traders are on hold until the employment report is released tomorrow, followed by Consumer Price Index (CPI), Producer Price Index (PPI), and the Retail Price Index on Wednesday.
USDJPY rallied from 144.66 to 145.22 due to rising US Treasury yields. Officials from the Ministry of Finance and the Bank of Japan (BoJ) have not publicly acknowledged their dissatisfaction with the move above 145.00. This suggests that they might be waiting for prices to approach 150.00 before taking action.
AUDUSD fluctuated in a 0.6457 and 0.6503 range. Prices were weighed down in Asia due to the Chinese news but found some support after Europe displayed less risk aversion.
NZDUSD traded within a 0.5954 to 0.5994 range ahead of the Reserve Bank of New Zealand (RBNZ) meeting on Wednesday. The bank is expected to keep rates unchanged at 5.5% due to an improving inflation outlook.
There are no significant US economic reports scheduled for today