The Canadian dollar, which is positively correlated to crude oil prices, advanced on hopes that OPEC and non-OPEC nations can come up with a deal to cap production and stabilize the market. Saudi Arabia has already expressed support for Venezuela’s proposal to freeze output levels but has specified that they will participate only if other oil producers do so. Iran has said that it would be “illogical” for them to cap output, especially since they’re just returning to the oil export market.
Still, USDCAD turned upon hitting resistance at the 1.3900 handle and is down to 1.3686, CADJPY bounced off the 81.00 handle to trade above 83.00, and GBPCAD broke below a daily double top reversal pattern to trade below 1.9600.
Other commodity currencies, namely the Aussie and Kiwi, also took advantage of the pickup in commodity prices and overall risk sentiment. Actual data was weaker than expected, though, as New Zealand reported a 1.2% decline in PPI input prices and a 0.8% slump in PPI output prices while Australia indicated a 7.9K increase in joblessness.
AUDUSD shrugged off this downbeat report and continues to make its way to .7200, AUDJPY is consolidating around 81.84, and EURAUD is testing support at 1.5500. NZDUSD is moving sideways at .6630, NZDJPY found support at 75.00 and is now at 75.66, and EURNZD dipped below 1.6800.
GBP loses further ground on downbeat jobs data
Even though the UK claimant count change came in stronger than expected with a 14.8K decline in joblessness versus the projected 2.9K drop, the unemployment rate held steady at 5.1% instead of improving to 5.0%. What really weighed on the pound was the drop in wage growth, as the average earnings index slipped from 2.0% to 1.9% as expected, underscoring the BOE’s view that downward price pressures are halting wage inflation.
FOMC minutes and market sentiment push majors around
Other dollar pairs were mostly directionless, although the release of the FOMC minutes spurred some volatility. Fed officials agreed that downside risks to growth and inflation have increased but maintained that the economy can still be able to achieve its 2% inflation target in the near term and that rate hikes are still on this year’s docket.
The Philly Fed index and US initial jobless claims are still up for release today but dollar pairs could be more sensitive to market sentiment, especially with the turn of the week opening the possibility of profit-taking activity.
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