The US$ rises, oil is unchanged, equity markets are stronger while US yields are unchanged. Australia signs nuclear submarine pact with U.S. & the UK. China is fuming saying it’s intensifying the arms race in the region, while France is upset at being pushed out from lucrative deal. Market is waiting for today’s US retail sales expected down 0.8% and initial jobless claim 328k for further taper clues. In other news, China’s first crude oil reserve auction could impact the market as it signaled that the top oil importer remains committed to reining in inflation by controlling commodity prices. COVID, Australia’s case rises but vaccination efforts give hope with 70% of the population having received their first dose. Putin in self-isolation after dozens of people in his entourage fell ill to the disease. In currency markets, CNY trades lower down 0.22%, while other Asian currencies are down 0.1%. AUD is down 0.27% while NZD is up 0.1%. Expect the markets to remain quiet until the release of today’s economic data.
Canada’s inflation hit an 18 year high ahead of a tightening election race. Foreign investors fearing post-election gridlock have taken a wait and see attitude. Market usually is favoring a leader that would be most friendly to investor, but it seems that during these uncertain times a strong mandate would be preferred. Support remains at 1.2625, while resistance holds at 1.2720.
EUR/USD has dipped below 1.18 (1.1766 – 3 weeks low) as a worsening market mood benefits the safe-haven dollar. ECB President Lagarde is set to speak (8am EST). Euro zone’s trade surplus declined in July from a year earlier, data showed that imports grew at a faster rate than exports. Support resets to 1.1760, while resistance holds at 1.1840.
Euro remained under pressure on ECB policymakers mixed view, mixed economic data helping push EURGBP lower. Support holds at .8500 (1.1765) while resistance resets to .8600 (1.1628) if breached look to .8650 (1.1560).
GBP is trading closer to 1.38, down from higher levels due to concerns about global growth and resurgent in USD demand. Support holds at 1.3785 and while resistance resets at 1.3900.