Forex US Review – USD drops against Canadian Loonie on hawkish BoC report

Important: This page is part of archived content and may be outdated.

The Euro capped gains after having reached a three-week high in the earlier European session on optimism of a new bailout deal to be reached soon with the help of Germany. Investors were cautious and did not believe that the Euro could rise any further since they need to see a more concrete and lasting solution to the Greek debt problem. From the high of 1.4423, EURUSD remained mostly range bound below that resistance level and above the 1.4360 support level throughout the US session. A further drop in the Euro was halted by a weaker greenback which dropped after disappointing economic data on

 

Sterling took a downturn after reaching a one month high in early European trading, extending losses into the US session. GBPUSD opened at 1.6500 edging down to lows of 1.6422. The UK lacked any significant fundamentals today as there were no major economic data releases. On Wednesday (tomorrow) Manufacturing PMI will be released, with expectations for a slight drop. The pound also lagged behind the Euro. EURGBP rose in US trading from lows of 0.8711 to highs of 0.8750 stopped at that resistance level.

 

The Swiss Franc traded sideways against the Dollar throughout the US session. After reaching a record low last week, the Dollar has managed to rebound slightly but its gains capped at 0.8545. What halted the greenback rising further today was the disappointing CB Consumer Confidence Index indicating declining consumer confidence in the U.S. The index dropped from 66.0 to 60.8 in May, much worse than predicted at 66.3

 

The US Dollar plummeted against the Canadian Dollar after the Bank of Canada released an announcement on its interest rate. Despite leaving its benchmark rate unchanged and as expected at 1 percent, the Banks hawkish report gave investors reason to expect a rate hike as early as September. This boosted the Loonie by some 63 pips, causing USDCAD to drop from 0.9717 to 0.9654.

 

Gold hasn’t created a clear trend today and was mostly range bound, remaining above support level of $1,530 and below resistance of $1,540. In times of uncertainty investors usually turn to gold as a safe investment. However, they are taking a wait and see mode depending on how fully resolved the Greek crisis will become.

 

EURUSD USDJPY GBPUSD USDCHF USDCAD GOLD
OPEN 

(12:00 GMT)

1.4401 81.56 1.6500 0.8523 0.9719 1537.83
DAY’S HIGH 1.4413 81.64 1.6511 0.8545 0.9727 1540.63
DAY’S LOW 1.4360 81.16 1.6422 0.8519 0.9654 1532.03
CLOSE 

(21:00 GMT)

1.4389 81.50 1.6448 0.8528 0.9685 1535.43