• USD/CAD bulls move in as US dollar firms. 
  • US oil and BoC sentiment supporting the CAD, but weekly technicals remain bullish. 

At the time of writing, USD/CAD is trading at 1.2575 and u slightly by 0.14% after climbing from a low of 1.2529 and reaching a high of 1.2594. On Monday, the pair touched a five-month low at 1.2807.

The US dollar is firmer on Thursday after dovish guidance from the European Central Bank helped.

The ECB has pledged to keep interest rates at record lows for even longer as the central bank warns that the Delta variant of the novel coronavirus posed a risk to the euro zone’s recovery.

DXY is trading just below 93 after trading yesterday at the highest level since April 1 near 93.191.  At the time of writing, the index is 0.13% higher at 92.89 and has travelled between a low of 92.507 and a high of 92.923. Further gains are expected and it could eventually test the March 31 high near 93.437. 

Meanwhile, the price of oil remains bid and a supportive factor for the CAD.

Expectations of tighter supplies until the end of the year has helped oil to recover from the 8% drop in WTI from the start of the week.

US crude prices were up 1.9% at $71.57 a barrel.

In domestic data, a preliminary estimate from Statistics Canada showed that manufacturing sales rose 1.9% in June, led by the transportation equipment industry.

Looking ahead, markets will be monitoring the Canadian Retail Sales report for May this coming Friday, which could offer further clues on the strength of the domestic economy.

As for positioning, the latest CFTC data has shown that speculative positioning on CAD remained – even after the recent USD strength – considerably skewed towards the net-long area (+20% of open interest), and above its 1-standard-deviation band.

The BoC recently delivered a broadly upbeat message on the recovery and left its forward guidance for 2H22 unchanged which has supported the currency. 

The central bank is expected to end asset purchases by the end of 2021, allowing markets to speculate on an earlier than projected hike.

USD/CAD technical analysis

Contrary to the BoC fundamentals, the technical outlook is telling a different story. 

The bullish reverse head & shoulders should be noted on the weekly time frame following the break of the dynamic trendline resistance. 

  • El dólar estadounidense gira a positivo frente a la mayoría de sus rivales durante la sesión estadounidense.
  • El GBP/USD recorta ganancias, aún se dirige a la segunda ganancia consecutiva.

El GBP/USD retrocedió casi 50 pips desde los máximos diarios cuando el dólar estadounidense recuperó terreno en todos los ámbitos. La libra cayó por debajo de 1.3750; más temprano el jueves, alcanzó un máximo de 1.3787, el nivel más alto desde el lunes.

El DXY giró a positivo durante la última hora, acercándose a 93.00 incluso cuando los rendimientos estadounidenses caen bruscamente. El rendimiento de EE.UU. a 10 años cayó de más del 1.30% al 1.24%. El Dow Jones no logró mantenerse en territorio positivo y perdió un 0.20%. La libra se mantiene entre las de mejor desempeño el jueves, ya que continúa corrigiendo al alza, recortando las pérdidas recientes.

Datos mixtos, BCE como se esperaba

Los datos económicos de EE.UU. fueron mixtos. Las solicitudes iniciales de desempleo subieron inesperadamente a 419.000, el nivel más alto en ocho semanas. Otro informe mostró que las ventas de viviendas existentes se recuperaron un 1.4% en junio, registrando la primera ganancia en cinco meses. En cuanto a COVID-19, el promedio móvil de siete días de casos nuevos aumentó 53%.

El evento clave del jueves fue la reunión del Banco Central Europeo (BCE). El banco central mantuvo la política monetaria sin cambios como se esperaba y señaló que seguiría siendo acomodaticia durante mucho tiempo.

El viernes, los datos económicos que se publicarán incluyen las ventas minoristas de junio en el Reino Unido y los PMI globales (julio – preliminar).

Niveles técnicos

                    

  • Gold remains on track to end the day little changed.
  • 100-day SMA continues to act as strong support.
  • XAU/USD near-term technical outlook stays neutral with a slight bearish bias.

After failing to rise above the 200-day SMA earlier in the week, the XAU/USD pair struggled to regain its bullish momentum and closed in the negative territory on Wednesday. Although sellers remained in control during the first half of the day and managed to drag the price toward the 100-day SMA, the risk-averse market environment helped the pair stage a rebound in the American session. As of writing, gold was virtually unchanged on a daily basis at $1,805.

Earlier in the day, the upbeat market mood, as reflected by the strong gains witnessed in major European equity indexes, made it difficult for the precious metal to find demand. Nevertheless, the broad-based USD weakness allowed XAU/USD to limit its losses.

With Wall Street’s main indexes failing to build on the two-day rally after the opening bell, safe-haven flows boosted gold. However, the greenback also capitalized on the souring market mood and forced XAU/USD to move sideways.

The data from the US showed on Thursday that the Initial Jobless Claims increased by 51,000 to 419,000 in the week ending July. This reading came in worse than the market expectation of 350,000, possibly weighing on risk sentiment. Moreover, the National Association of Realtors announced that Existing Home Sales increased by 1.4% on a monthly basis in June. Further details of the publication revealed that, on a yearly basis, the national median home price for existing homes increased by 23.4% from June 2020 to $363,000.

On Friday, the IHS Markit will release the preliminary Manufacturing and Services PMI reports for the US.

Gold technical outlook

Following Thursday’s action, the near-term outlook remains neutral with a slight bearish bias as the price stays closer to the key support area than the resistance area. Meanwhile, the Relative Strength Index (RSI) indicator on the daily chart continues to stay flat around 50, confirming gold’s indecisiveness.

On the downside, the initial support is located at $1,800 (psychological level, Fibonacci 50% retracement of April-June uptrend) ahead of $1,790 (100-day SMA). A daily close below the latter is likely to open the door for additional gains toward $1,775 (Fibonacci 61.8 retracement).

On the other hand, the 200-day SMA aligns as strong resistance at $1,823 ahead of $1,830 (Fibonacci 38.2% retracement) and $1,835 (50-day SMA).

Additional levels to watch for

 

Today’s European Central Bank (ECB) meeting contained very little that was new or noteworthy, argue analysts at TD Securities. They point out a stronger anchor to distant inflation forecasts makes a scant difference to a spot instrument. They see some disappointment to those looking for a stronger dovish signal that suggests some potential for a EUR/USD move higher but they warn the move is limited as investors shift their attention to next week’s FOMC meeting.

Key Quotes: 

“The lack of any policy cues for an upcoming meeting could provide the fuel to get us there, but we expect investors will pivot quickly to a focus on next week’s FOMC meeting. In line with this, our ambition for a significant move higher is rather limited. While we see scope for some additional upside potential for EURUSD, we think spot is likely to remain confined to familiar ranges until fresh catalysts emerge.”

“The move has seen spot climb above initial resistance around 1.1825 with 1.1851 as the next obvious objective to the upside. More significant, however, would be a push above last week’s high of 1.1881. We think a weekly close above there could begin to change the market’s perception of the pair’s directional momentum.”

“We are willing to consider this week’s trough around 1.1750 as a potential base for this cycle. We continue to keep a close eye on the end-March low at 1.1704 as major support, however.”

Citing four sources familiar with the matter, Reuters reported on Thursday that two European Central Bank policymakers, Jens Weidmann and Pierre Wunsch, held out against the new guidance and several more voiced some objections.

According to the sources, those opposing the ECB’s new guidance objected to the length of commitment and noted the lack of clarity. 

“Some ECB policymakers wanted to include asset purchase programme in guidance, aim for “at least” 2% inflation not just 2%,” sources further noted and added that they held a lengthy discussion on whether inflation overshoot would be intentional or incidental.

Market reaction

The EUR/USD pair, which climbed to a daily high of 1.1831 earlier in the day, remains on the back foot in the American session and was last seen losing 0.2% on the day at 1.1768.

Data released on Thursday in the US showed Existing home sales rose 1.4% during June, reaching a 5.86 million-unit pace annual rate. According to analysts at Wells Fargo, the increase in inventory leaves room for an upturn in home sales. 

Key Quotes: 

“Existing home sales increased 1.4% during June to a 5.86 million-unit pace, ending a four-month streak of declines. The turnaround is a reminder that, while home buying activity has cooled off this year alongside shrinking inventories and skyrocketing prices, underlying demand for homes remains strong.”

“A recent jump in pending home sales presaged June’s improvement in existing sales. After declining 4.4% in April, pending home sales, which lead closings by a month or two, jumped 8.0% in May. Looking ahead, we expect housing market activity to remain strong, although some moderation may be in the cards. Mortgage applications for purchase have recently fallen back towards their pre-pandemic trend over the past few weeks. Overall mortgage applications fell 4.0% during the week ending July 16, with purchase applications sinking 6.4%. The slip in applications suggests that homes sales may slow down this summer.”

“Home sales appear poised to strengthen in the second half of the year as the housing market moves back into balance. The supply picture should continue to improve as higher prices bring out more sellers. Moreover, mortgage rates are likely to remain low, which should help offset higher prices and reinforce strong demand from an incoming cohort of Millennial entry-level buyers.”
 

Risks on the USD/JPY pair are titled to the downside, according to analysts at MUFG Bank. They see the pair trading between 106.00 and 112.00 over the next weeks.  

Key Quotes:

“JPY positioning according to the weekly IMM data has become extreme. Based on z-score analysis covering a 2-year window, the current short position amongst Leveraged Funds and Asset Managers & Institutional Investors is close to 2 standard deviations from the average – the last time this happened was back in November 2015. That marked a point when USD/JPY peaked at levels over 120.00 before heading sharply lower in 2016. We are not suggesting that scale of rally for the JPY now (above 120 to 100) but more that the current level of shorts is at an historical extreme and if risk aversion was to intensify, we could well see a sharp correction lower in USD/JPY.”

“More challenging financial market conditions on the back of a worsening economic outlook also brings with it the limited monetary policy options available to the BoJ that tends to result in inflation expectations remaining far more muted in Japan relative to the rest of the world.”

“So we take are taking a bearish view for USD/JPY over the short-term. The primary driver of any move will inevitably be global risk conditions rather than domestic developments. Even if there is no notable equity market correction, the sharp move lower in UST bond yields still leaves USD/JPY vulnerable to a downside correction as one key catalyst for the move higher in USD/JPY reverses. The 10-year UST bond yield (1.28%) is at levels last seen in February when USD/JPY was trading below 106.00.”

  • El AUD/USD estuvo bajo una presión moderada en la sesión americana.
  • El índice del dólar estadounidense continúa fluctuando por debajo de 93.00.
  • Los principales índices de Wall Street operan de forma mixta después de la campana de apertura.

El par AUD/USD subió a un máximo diario de 0.7398 en las primeras horas de la sesión estadounidense, pero perdió su tracción en la última hora. Al momento de escribir, el par cotiza en 0.7371, subiendo un 0.2% en el día.

DXY rebota mientras el estado de ánimo del mercado se torna amargo

La debilidad generalizada del USD ayudó al AUD/USD a subir durante la primera mitad del día. Sin embargo, con los principales índices de Wall Street luchando por basarse en el repunte de dos días, el dólar comenzó a encontrar algo de demanda y limitó el alza del AUD/USD. Por el momento, el índice del dólar estadounidense (DXY), que tocó un mínimo diario de 92.50, se mantiene prácticamente sin cambios en el día en 92.75.

Los datos de Australia mostraron más temprano en el día que la Confianza Comercial del Banco Nacional de Australia bajó a 17 en el segundo trimestre desde 19 en el primer trimestre.

Por otro lado, el Departamento de Trabajo de EE.UU. informó que las Solicitudes Iniciales de Desempleo aumentaron a 419.000 en la semana que terminó el 17 de julio de 368.000. Esta lectura fue peor que la expectativa del mercado de 350.000 y pesó sobre el sentimiento del mercado. Otros datos de los EE.UU. revelaron que las ventas de viviendas existentes aumentaron un 1.4% en junio y los precios medios de las viviendas aumentaron un 23.4% anual.

El viernes, los informes del PMI manufacturero y servicios del Commonwealth Bank de Australia serán considerados para un nuevo impulso.

Niveles técnicos