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USD/CAD - Canadian Dollar Looking for a GDP Boost

The Canadian dollar traded choppily inside a narrow range overnight. Traders are looking ahead to today’s Gross Domestic Product report. The Canadian economy is expected to have grown 1.0% m/m or 6.7% y/y in March. Better than expected data should lead to Canadian dollar demand while a weak report will undermine the currency. Overnight, FX markets churned inside well-defined ranges. The Asia equity indexes closed on a mixed note. Chines stocks posted gains while Japan and Australian indexes were closed with small losses. European bourses are higher, thanks to better than expected Euro area data, while S&P futures point to a positive open on Wall Street. West Texas Intermediate (WTI) oil, the North American benchmark for crude rallied sharply, climbing from $66.92/barrel to $68.39/b. Traders expect that the Organization of the Petroleum Exporting Countries will confirm that it will stick to its schedule for phasing out production cuts. OPEC believes that new production from Iran will not disrupt the market. EUR/USD is trading with a bid tone in a narrow $1.2214-$1.2241 range. Eurozone inflation rose 2.0% y/y in May, up from 1.6% y/y in April Consumer Price Index is now at the European Central Bank target rate for inflation. German and Eurozone employment data improved which provided additional support for the single currency. The EUR/USD uptrend is intact above 1.2130, a level guarded by support at $1.2205. GBP/USD rallied in Asia, then dropped in Europe, falling from $1.4249 to $1.4168 after the U.K. Final May Manufacturing Purchasing Managers Index was lower than previous (actual 65.6 vs previous 66.1). Still the result is bullish. The CIPS statement noted, "Conditions in the manufacturing sector improved at an unprecedented rate in May, as output growth strengthened, and new orders rose at the quickest pace in the near three-decade survey history." The intraday GBPUSD technicals are bullish above $1.4150. USD/JPY rallied from 109.40 to 109.67, supported by the rise in U.S. 10-year treasury yields. USD/JPY gains are facing headwinds due to inflation differences between Japan and the U.S. There is no inflation in Japan, meaning that Japan offers a higher real yield than the U.S. The Reserve Bank of Australia left monetary policy unchanged. The OCR rate is unchanged at 0.10% and reiterated that rates will remain unchanged until 2024. AUDUSD danced between 0.7732 and 0.7767 and is trading at the overnight low. NZD/USD tracked AUD/USD lower. U.S. Institute for Supply Management Manufacturing PMI, Dallas Fed Manufacturing Business Index, and construction spending are due.
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