USDCAD at 2019 Lows, EURUSD Dips on ECB Dove, GBPUSD Stabilises

2019-07-04 14:00:00

MARKET DEVELOPMENT – USDCAD at 2019 Lows, EURUSD Dips on ECB Dove

DailyFX 2019 FX Trading Forecasts

USD: FX pairs have held relatively tight ranges in this holiday thinned trading session. Alongside this, sizeable option expiries in major USD pairs have also kept price action relatively subdued. In particular, this has been observed in EURUSD with $6.2bln worth of vanilla options from 1.1265-1.1315. That said, the Euro did pullback from better levels, which in turn supported the greenback following very dovish commentary from ECB’s Rehn who stated that further monetary stimulus is now needed until there is an improvement in inflation and economic prospects, adding that the slowdown is no longer temporary.

GBP: The Pound continues to hover around its recent lows, following BoE Governor Carney’s recent cautious comments. However, GBPUSD has managed to stabilise with support stemming from the GBP October 2016 flash crash trendline.

CAD: Following yesterday’s close below the prior YTD low at 1.3068, USDCAD has grinded lower. Eyes are now firmly placed on a test of the 1.3000 level. However, little scheduled for the rest of the session, focus turns towards the Canadian jobs report.

EM FX: Global bond yields continue to collapse with German Bunds now yielding less that the ECB’s deposit rate (-0.4%), as such, with expectations of fresh monetary stimulus from the ECB and the Fed, carry trade has begun to look attractive, which in turn has seen high yielders (ZAR, TRY, BRL) benefit, particularly given the low FX volatility.