USD Dips on Soft PPI Posing Downside Risks to Tomorrow's CPI - US Market Open
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MARKET DEVELOPMENT – USD Dips Producer Prices Show Surprise Decline
USD: The Dollar and US yields dipped slightly after producer prices saw an unexpected decline for the first time in 18 months. As such, this has placed downside risks to tomorrows inflation report. Thus far, today’s session has been a relatively quiet affair with the USD magnetised around the 95.00 level.
CAD: The Canadian Dollar surged after source reports that Canada were said to provide concessions through allowing US farmers access to Canada’s dairy market in order to reach a NAFTA deal. Canada’s protected dairy industry has been one of the major stumbling blocks in NAFTA renegotiations, as such, this concession from Canada increases the possibility that the US and Canada could reach an agreement before the October 1st deadline.
GBP: Tory infighting has kept the Pound on the back foot this morning with UK press reports highlighting that as much as 50 Tory rebels could plot to oust PM May amid the disagreements surrounding the UK’s Chequers plan. GBP holding 1.30 for now, having pulled back from highs of 1.3050.
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USDCAD: Data shows 42.7% of traders are net-long with the ratio of traders short to long at 1.34 to 1. In fact, traders have remained net-short since Aug 30 when USDCAD traded near 1.29833; price has moved 0.6% higher since then. The number of traders net-long is 23.0% lower than yesterday and 27.3% lower from last week, while the number of traders net-short is 18.5% lower than yesterday and 39.2% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDCAD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed USDCAD trading bias.
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--- Written by Justin McQueen, Market Analyst
To contact Justin, email him at Justin.email@example.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.