The U.S dollar is on the defensive this morning as risk appetite increased and positive data in Europe boosted its rivals. Global equities are in recovery mode today on reports that some U.S. officials are trying to restart trade talks before more tariffs come into effect on July 6th.
We will also be keeping an eye on today’s OPEC meeting. Oil prices are up 1.5% and is holding its gains following reports that the cartel has come to an agreement in principle to boost oil production. The group apparently has come to a last-minute compromise that overcame Iran’s threats to veto a supply hike. The accord calls for an additional 600,000 barrels a day. The relatively small increase is putting upward pressure on the price of black gold.
On our side of the pond, there are limited risk events that could re-spark a dollar rally. U.S. Markit service and manufacturing PMI are slated for release at 9:45 a.m.
The Euro is gaining for a second straight day against the U.S. dollar in response to positive economic data. While Eurozone manufacturing PMI were a little softer, service and composite PMI impressed. The Euro also benefited from a “short squeeze” that saw traders take profit near EUR/USD lows.
EUR/USD is at a one-week high.
The Canadian dollar was unable to take advantage of higher oil prices and has sold off quickly this morning. A report showed that Canada’s economy showed unexpected weakness in the second quarter. The consumer price index recorded an annual pace of 2.2% in May, well below the 2.6% expected by economists. A separate report showed that retail sales dropped 1.2% in April.
The Canadian dollar is at its weakest level in more than a year versus the greenback.