Improved Risk Appetite Keeps USD Down, Canada CPIs in Focus

USD Keeps Sliding on EU Fund Deal and Positive Vaccine Headlines

The US dollar continued to trade lower against all the other G10 currencies on Tuesday and during the Asian morning Wednesday. It lost the most ground versus AUD, NOK, SEK, and NZD in that order, while it underperformed the least against JPY, GBP and CAD.

NZD/JPY — Technical Outlook

Yesterday, NZD/JPY broke its key resistance barrier, at 70.71, marked by the highs of July 7 th, 9 thand 13 th. This way, the pair broke above the previous high of July and formed a new one. But the rate continues to climb higher, which suggests that the pair is not done with establishing a July’s high yet. In addition to everything discussed above, the rate is still balancing above a short-term upside support line drawn from the low of June 21 st. For now, we will stay bullish and aim for some higher areas.

CAD-Traders Await Canada’s CPIs for June

As for today, the most important data point on the calendar is Canada’s CPIs for June. The headline rate is forecast to have rebounded to +0.3% yoy from -0.4%, while no forecast is available for the core rate which in May stood at +0.7%. That said, with the yoy rate in WTI improving during the month of June, if the headline rate is set to rebound as much as the forecast suggests, the core one is likely to rise by less.

USD/CAD — Technical Outlook

Yesterday, USD/CAD broke below its key support area, at 1.3488, which was also acting as the lower bound of the short-term range, which was in play from around the beginning of July. The pair drifted lower, but found a new decent support zone near the 1.3437 hurdle, marked by the inside swing high of June 10 th. Nevertheless, the near-term outlook seems to be bearish for now, hence why we will aim for slightly lower levels overall.

As for the Rest of Today’s Events

Apart from Canada’s CPIs, we also get the EIA (Energy Information Administration) weekly report on crude oil inventories for last week. The forecast is for a 2.088mn barrels slide, after a 7.493mn tumble the week before, but bearing in mind that the API report revealed a 7.544mn barrels inventory build, we would consider the risks surrounding the EIA forecast as tilted to the upside. The US existing home sales for June are also coming out, and the consensus is for a 24.5% mom rebound after a 9.7% slide in May.

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