May 17, 2019
USDCAD Open (6:00 am EDT) 1.3491-94 Overnight Range 1.3459-1.3496
USDCAD is inching higher in early New York trading. It is supported by ongoing US dollar demand vs the majors stemming from elevated risk aversion. Antagonistic US/China trade negotiations, rising US/Iran tensions and the increased risk of a “no-deal” Brexit have traders looking for safe-havens. USDCAD gains have been slowed, marginally as WTI oil prices rebounded above $63.00/barrel.
China’s state media are complaining about the American’s lack of sincerity in resolving the trade dispute. The SCMP quoted Taoran Notes, an account affiliated with Economic Daily writing “If there is no real concrete action by the United States, it will be meaningless for you to come and talk. It is better to suspend the consultation completely and return to the normal working track.”
GBPUSD dropped from 1.2797 at the close to 1.2756. There are reports that the UK would hold an “indicative Brexit vote next week, and Labour’s Jeremy Corbyn said he wouldn’t support it. If the Tory’s lose the Brexit vote, which appears almost a sure thing, Prime Minister Theresa May will resign. That paves the way for Prime Minister Boris Johnson, which can’t be a good thing for Sterling. GBPUSD has declined for five consecutive days and seven of the past nine, suggesting it is ripe for a corrective rally to 1.2880.
EURUSD has traded with a negative bias inside a 1.1160-1.1183 range. Today’s Eurozone inflation data (Actual 1.7% vs forecast 1.7%, Core 1.3% vs forecast 1.2% y/y) provides a modicum of support for the single currency as it helps to diminish rate cut risks.
USDJPY slipped from 110.02 in early Asia trading to 109.56 in Europe on safe-haven demand and soft US Treasury yields. Sellers were also encouraged by comments from Bank of Japan Governor Haruhiko Kuroda saying that “rates will stay low for a long time, quite a long time.”
Negative risk sentiment and dovish central bank outlooks drove AUDUSD and NZDUSD lower.
Iran sanctions, Middle East tensions and ongoing Opec production cuts have underpinned WTI oil prices and offset concerns of slowing global demand due to the China/US trade war.
Michigan Consumer Sentiment (forecast 97.5 vs April 97.2) is the only data on tap today. Canada is closed on Monday. Canadian’s will be knocking off early to get a head start to the Victoria Day long weekend.
USDCAD broke into the bullish half of its 1.3400-1.3500 range with the move above 1.3450 yesterday. However, the to-ing and fro-ing price action between the top and bottom of the two week range is just noise. Only a break below 1.3300 or above 1.3525 suggests bigger moves to follow. For today, USDCAD support is at 1.3440 and 1.3405. Resistance is at 1.3500 and 1.3525. Today’s Range: 1.3440-1.3520
Chart: USDCAD daily