 Asian markets presented a subdued trading environment today, despite overnight rallies in their US counterparts. A notable exception is that Hong Kong's stock market underwent a significant tumble, taking a step back after a day off. Elsewhere, indices generally hovered around flat levels within a tight range. In the realm of currencies, most major pairs and crosses stayed confined within Monday's narrow range. While Dollar, Yen, and Canadian dollar found themselves on the weaker side, Aussie and Kiwi are in stronger positions. European currencies showed mixed performance. Particular attention is directed towards USD/CAD today, with release of Canada's CPI and US retail sales data on the horizon. Canada's headline inflation is anticipated to dip further to the top of BoC's 2-3% target range in June. However, BoC may be more interested in the monthly rise in core inflation, in order to gauge its persistent undercurrent. Other consumer spending and economic activity data will also carry substantial weight as the economy needs to cool off sufficiently to reduce core inflation. Today's data could evoke a complex response from Loonie. From a technical standpoint, USD/CAD's price actions from 1.3976 appear to be merely corrective. Ideally, the pair should bottom around the current level to round off the five-wave decline from 1.3860, as well as the three-wave pattern from 1.3976. Break of 1.3386 resistance would reinforce this outlook and retain medium-term bullishness. Conversely, decisive break of 61.8% projection of 1.3653 to 1.3115 from 1.3386 at 1.3054 might spark a faster descent and increase the probability of a larger bearish trend reversal. The next move, regardless of whether it is triggered by today's data or not, will be critical. In Asia, at the time of writing, Nikkei is up 0.02%. Hong Kong HSI is down -2.17%. China Shanghai SSE is down -0.35%. Singapore Strait Times is down -0.17%. Japan 10-year JGB yield is down -0.0009 at 0.479. Overnight, DOW rose 0.22%. S&P 500 rose 0.39%. NASDAQ rose 0.93%. 10-year yield dropped -0.022 to 3.797. |
