FX markets are quiet. That is usually the case when London, the world’s biggest FX market is shuttered for a holiday. The average daily FX turnover in London is $2.73 billion (Bank of England, April survey) The average daily FX turnover in New York for the same period was just $995.33 billion.
The US dollar ended last week on a sour note, led by a 2.1% rally in EURUSD on the back of soft economic data, a somewhat improved risk tone due to China and the US talking trade, and because of Fed Chair Jerome Powell’s Jackson Hole speech. To some, the Chair’s remarks were a tad dovish as he defended the Fed’s gradualist approach to rate increases. The Fed wants to avoid both shortening the expansion and overheating the economy.
The greenback opened in New York, little changed against Friday’s close although AUDUSD and NZDUSD were a little worse for wear. EURUSD recovered above 1.1600 after German IFO survey data was better than expected. GBPUSD traded in a tight range, seemingly unperturbed by a rash of negative “no-deal Brexit” articles in the weekend press.
The Canadian dollar doesn’t appear to be liking the news of an imminent US/Mexico trade deal. Bloomberg reports “three people familiar with the process” saying significant breakthroughs in the energy and automobile files were achieved in the past few days. Canada was not part of the talks and traders are concerned that the US/Mexico deal weakens the Canadian bargaining position. USDCAD climbed from 1.3030 at the open to 1.3060 in thin New York trading.
The only data of note today is the US Dallas Fed Manufacturing Business Index.
USDCAD Technical Outlook
The USDCAD technials are mixed. The intraday techincals are bullish while prices are above 1.3020, looking for a break above 1.3060 to extend gains to 1.3100 and then 1.3130. The short term technicals are bearish while prices are below 1.3160 looking for a break of support at 1.3000 to test 1.2960 and then 1.2850. A negative result to a US/Mexico deal would put 1.3350 in play while a positve result would probe support in the 1.2940-60 zone.
Today’s Range 1.3020-1.3120