(MENAFN- Baystreet.ca) The Canadian dollar joined EUR, JPY, GBP, and NZD in opening lower compared to yesterday's close. EUR and CHF are higher due to mild risk aversion sentiment, while AUD gained on the back of China trade data.
FX action was relatively subdued in Asia. USD/JPY traded with a slight bearish bias but stayed inside yesterday's trading band. The Bank of Japan policy meeting is tonight, and they will provide fresh forecasts, although policy will remain unchanged.
China reported that exports and imports increased in June. Imports jumped 2.7% while exports increased by 0.5%, with the gains attributed to the easing of lockdowns in the U.S. and Europe. Rebounding China growth gives hope for a rebound in the global economy.
However, the trade data news was diminished somewhat, by escalating U.S./China tensions. The U.S. rejected most of China's claims to the South China Sea. U.S. Secretary of State Mike Pompeo said: "Beijing's claims to offshore resources across most of the South China Sea are completely unlawful, as is its campaign of bullying to control them." China disagrees.
USD/JPY drifted lower in Asia, but losses were not sustained, and the currency pair is trading in Toronto where it closed Monday.
AUD/USD and NZD/USD are trading at the top of their overnight bands, buoyed by the China trade data, higher EUR/USD prices, and Wall Street equity futures in positive territory. Equity traders were nonplussed after JPMorgan announced a 50% drop in Q2 profit because the details of the earning report were stellar.
EUR/USD pushed higher in Europe after German and ZEW Survey results were close to forecasts. Germany July ZEW Economic sentiment was 59.3 compared to an estimate of 60.0. Eurozone Economic sentiment was unchanged from May's results. EUR/USD is probing resistance at $1.1370 targeting $1.1430.
GBP/USD started falling yesterday, and it continued to do so overnight, until finding a bit of support at $1.2508. Prices were undermined after U.K. May Gross Domestic Product was just 1.8%, disappointing analysts and traders looking for a 5% gain.
Canadian dollar direction continues to be dictated by broad U.S. dollar sentiment. WTI oil prices have been steady in a $38.50-$41.10 band which has helped or hurt the Loonie's fortunes. Traders are hoping for direction from Bank of Canada guidance tomorrow.
Today, FX direction will be dictated by U.S. inflation data, Wall Street, and maybe even comments from a series of Federal Reserve speakers.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
Learn how KnightsbridgeFX can help you save up to 2% when buying or selling US dollars compared to your Canadian bank's rates – click here to compare bank rates
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