Holidays in Japan and China took the “oomph” out of FX markets to start what should be a busy week, despite a slew of National holidays on Tuesday.  Today brings the usual month-end portfolio flows, followed by the FOMC meeting on Wednesday and US nonfarm payrolls data on Friday.

Asia FX trading was subdued, but the US dollar still had a bid.  AUDUSD and NZDUSD dipped, in part due to month-end flows but mostly because of the widespread bullish US dollar tone.  Traders ignored an uptick in China Manufacturing PMI and Aussie and Kiwi economic reports.

USDJPY ticked higher, rising from 109.03 to 109.31 due to bullish technicals and a tick higher in US Treasury yields.

German April inflation data was unchanged at 1.5%, y/y while other Eurozone data was a tad soft which contributed to EURUSD selling.  The single currency dropped to 1.2099 from 1.2137.

Sterling traded with a negative bias.  Mark Carney’s flip-flop on interest rates, more political turmoil for Theresa May and residual effects from poor data drove GBPUSD from 1.3790 to 1.3729.

Oil prices declined, driven by a rise in the Baker-Hughs rig count.  A Reuters poll of 38 economists predicts Brent Crude prices will average $67.40 in 2018, more than 5% higher than what they predicted last month.  Opec compliance to production cuts is the main reason.

USDCAD traded narrowly torn between broad US dollar demand and the prospect of an early and positive resolution to the NAFTA talks.  US tariffs on Steel and Aluminum are supposed to kick in on May 1.  The idea that a new NAFTA agreement will be reached suggests that USDCAD risk is tilted toward the downside.

Today’s US data includes Personal Income, Chicago PMI and Home Sales.

USDCAD Technical Outlook

USDCAD is consolidating in a 1.2800-1.2900 range with a break either side yielding 0.0100 points.For today, USDCAD is in a minor uptrend above 1.2830 looking for a break above 1.2860 to test 1.2900.  A break of 1.2830 would lead to 1.2800

Today’s Range 1.2810-1.2890