The ECB announced that it would charge 25% duty on a variety of US products, starting Friday.EURUSD did not react. (yet). EURUSD is directionless inside a 1.1537-1.1594 range. ECB member Villeroy echoed Draghi and said no rate hikes until 2019. The ECB Forum in Sintra, Portugal has a Fed Chair Powell and ECB President Draghi on a panel.
FX trading was subdued overnight. It was the third consecutive session where the data cupboard was sparse, and traders appear to have gotten bored with the China/US narrative. (Bored, but not ignored)
It was China that sparked a mild dose of optimism into Asia FX. The People’s Bank of China (PBoC) issued a paper which suggested cutting the reserve requirement ratio’s (RRR). Asia equity indices rallied led by a 1.24% gain in the Nikkei 225.
AUDUSD traded firmer on the news, aided by China’s muted response to Trump’s trade histrionics. AUDUSD rose from 0.7369 to 0.7408 before retreating during the European session. Prices opened in the middle of the range in New York. The New Zealand dollar didn’t fare as well as the Aussie. It peaked early and dropped in Europe, in part due to weaker than expected Consumer Confidence.
USDJPY traded in a 109.86-110.23 range. One Committee member suggested more easing was needed. Traders focused on slightly firmer US Treasury yields and remained concerned about the China/US trade spat.
GBPUSD chopped about in a 1.3149-1.3176 range. Traders are torn between bearish sentiment from technicals and Brexit issues and the small risk of a hawkish tone in Thursday’s Bank of England policy meeting.
The Canadian dollar is a basket case. Bullish USDCAD technicals, fears of widening US/CAD interest rate differentials, tariffs on Steel, Aluminum, softwood lumber with threats of more tariffs on cars and dairy plus the risk that Nafta collapses has underpinned the currency pair. Relief may come on Friday if Canadian Retail Sales and Inflation data surprise to the upside. Robust data would give the Bank of Canada plenty of incentive to raise interest rates in July.
USDCAD Technical Outlook
The intraday USDCAD technicals are bullish . the steeply rising uptrend channel is bound by 1.3240 on the bottom and 1.3340 on the top. Resistance is in the 1.3350-770 area. A break above that level targets 1.3470 and 1.3540.For today, USDCAD spport is at 1.3240 and 1.3210. Resistance is at 1.3310 and 1.3340.
Today’s Range 1.3240-1.3320