While most major pairs are staying in range, Canadian dollar is the star performer today, extending recent rally across the board. USD/CAD breaches 1.08 level while EUR/CAD dives to as low as 1.5355. Both are set to take on June's low, riding on further rise in risk appetite as well as strength in price of crude oil. Euro is lifted mildly against dollar by better than expected PMI data from Eurozone released earlier today but is still limited below this week's high of 1.4290. Sterling, on the other hand, weakens after worse than expected Q2 GDP report.


Data from Eurozone today saw PMI manufacturing rose much more than expected from 42.6 to 46 in Jul while services PMI also improved more than expected from 44.7 to 45.6, beast reading since last August. Germany Ifo business climate also rose more than expected to 87.3, highest reading since last October.

Data from UK were disappointing. 2Q advance GDP report showed -0.8% qoq, -5.6% contraction versus consensus of -0.3% qoq, -5.2% yoy. The released raised the odds that BoE will expand its quantitative easing program again, which depends on the forecasts to be shown in the Inflation Report to be released in August.

USD/CAD Mid-Day Outlook

USD/CAD's decline extends further to as low as 1.0798 so far today and intraday bias remains on the downside for 1.0784 low first. Break will confirm that whole decline from 1.3063 is resuming and should target target 61.8% retracement of 0.9056 to 1.3063 at 1.0587 next. On the upside, above 1.0923 will turn intraday outlook neutral and bring consolidation. But recovery should be limited by 1.1223 resistance and bring fall resumption.

In the bigger picture, there is no change in the view that fall from 1.3063 is a correction to five wave rally from 0.9056. Nevertheless, current development indicates that such decline is not completed yet and could extend further to 61.8% projection of 1.3063 to 1.0784 from 1.1723 at 1.0315. But, such decline is still expected to conclude inside support zone of 1.0297/0819. Though, above 1.1723 resistance is now needed to indicate that such decline has completed. Otherwise, risk remains on the downside in case of recovery.


Economic Indicators Update

GMT Ccy Events Actual Consensus Previous Revised
4:30JPYAll Industry Activity Index M/M May0.70%1.00%2.60% 
7:30EURGerman PMI Manufacturing Jul A45.242.140.540.9
7:30EURGerman PMI Services Jul A48.445.944.345.2
8:00EUREurozone PMI Manufacturing Jul A4643.642.442.6
8:00EUREurozone PMI Services Jul A45.645.344.544.7
8:00EURGerman IFO - Business Climate Jul87.386.685.9 
8:30GBPGDP Q/Q 2Q A-0.80%-0.30%-1.90%-2.40%
8:30GBPGDP Y/Y 2Q A-5.60%-5.20%-4.90% 
8:30GBPIndex of Services (3M/3M) May-1.00%-0.80%-1.20% 
14:00USDU. of Michigan Confidence Jul F 6564.6