1. The USD/CAD Could Explode in Either Direction, All Eyes on BoC and Powell
The dollar climbed higher this morning on expectations of a less dovish U.S. Federal Reserve today but has not broken significant levels yet. The greenback was also boosted after news that U.S. and Chinese trade officials held a “constructive” phone conversation on Tuesday. We would expect to see a USD/CAD breakout in either direction, it all depends on the Fed chair’s testimony and the latest BoC Monetary Policy Meeting both at 14:00 GMT. Elsewhere, the EUR remained under pressure with expectations of an even more dovish head of the central bank than Draghi had been.*
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2. On the Calendar:
A batch of UK data including GDP are due before the afternoon and given the latest economic data out of the UK, chances are they won’t be positive and that they will put more pressure on an already capitulating GBP. Later, market participants will focus on Powell’s much-awaited speech and the latest Interest Rate Decision by the Bank of Canada at 14:00 GMT. The BoC is seen holding rates steady at 1.75%, but any dovish statements by the BoC governor could send the CAD tumbling. Oil prices will also be affected by the release of the latest Crude Oil Inventories data at 14:30 GMT this afternoon.**
3. Gold Remains Subdued, BTC Higher
XAU/USD remained supported by market uncertainty but edged slightly lower on a stronger greenback this morning. Spot gold did not break the $1,380 yesterday but the noble metal still shows signs of looking toppish and possibly correcting downwards. Again, Powell’s statement will be key for further movement. Elsewhere, BTC pushed further up beyond the $12.8k and is testing that area now from the upside. If the level is confirmed as a support, the 13k round figure may be conquered next.**
4. Oil Prices Rise
Oil prices rose this morning after an industry group reported that U.S. stockpiles fell for a fourth week in a row. West Texas Intermediate (USOIL) crude had climbed $1.05 , or 1.8% by 8:45 GMT. Brent was up 82 cents, or 1.3%, at $64.98. Watch for the crude oil stocks this afternoon in the midst of Fed news and a BoC central bank meeting.***
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*FXStreet Jul 10, 2019 03:07 AM ET
**Reuters Jul 10, 2019 3:53 AM ET
***CNBC Jul 10, 2019 2:48 AM ET