US dollar edges up ahead of the Jerome Powell testimony
The US dollar index moved slightly higher in the Asian session as investors waited for Jerome Powell’s testimony to Congress. This will be the first testimony after Friday’s job report, which was much better than expected. Numbers from the Bureau of Labor Statistics (BLS) showed that the economy added more than 224k in June, which was much better than May’s 75k. In today’s testimony, Powell will likely provide guidance on the number of interest rates cuts that will be expected this year. Investors will also receive the minutes of the previous FOMC meeting.
In the United Kingdom, investors will receive important economic data from the Office of National Statistics. The industrial production is expected to have gone up by 1.6%, which will be higher than the previous decline of -2.7%. On a YoY basis, the production is expected to have increased by 1.1%. The manufacturing production is expected to have increased by 1.0%, which will be higher than the previous -0.8%. The trade deficit is expected to have increased to GBP 12.55 billion from the previous GBP 12.11 billion. The GDP is expected to have expanded by 0.3%.
The Bank of Canada will conclude the monetary policy meeting started yesterday. The bank is expected to leave interest rates unchanged at 1.75%. Investors expect the bank to remain relatively hawkish because it is under no pressure to slash rates. This makes it one of the few central banks that are not talking about a rate cut. However, if the Fed cuts rates more than once, the bank could be under pressure to slash rates as well.
The USD/CAD was relatively unchanged in the Asian session and is currently trading at 1.3123. This is slightly higher than the month-to-date low of 1.3035. On the four-hour chart, this price is slightly below the 23.6% Fibonacci Retracement levels. It is also below the 25-day and 50-day moving averages. The RSI has moved up to the current high of 60 while the momentum indicator has remained above the 100 level. The pair will likely remain at these levels ahead of the BOC decision.
The EUR/USD pair was relatively unchanged in the Asian session. It is now trading at 1.1207, which is slightly higher than yesterday’s high of 1.1192. On the hourly chart, the pair has been on a steep decline that started on June 25, when it was trading at 1.1412. The current price is along the 25-day moving averages and slightly below the 50-day EMA. The pair will likely remain in this holding pattern as investors wait for the Fed chair testimony.
The XBR/USD pair moved higher after data from the American Petroleum Institute (API) showed that US inventories declined by more than 8 million barrels. The pair rose to a high of 64.75, which was higher than the month-to-date low of 61.92. On the hourly chart, the pair is above the 14-day and 28-day moving averages while the RSI has moved slightly higher. The pair will likely continue rising to reach a high of 65.