June 23, 2020
USDCAD Open (6:00 am) 1.3526-30, Overnight Range: 1.3488-1.3569
- White House economic advisor Navarro muddles messages and trashes Asia markets
- Trump’s tweet calms nerves
- Eurozone PMI’s rebound strongly
- US dollar opens mixed after choppy overnight session
Percent change in US dollar since Thursday’s NY open
Source: Saxo Bank/IFXA
FX Recap and outlook: Whitehouse Economic Advisor stuck his foot in his mouth, and Asia financial markets got thrashed.
During a FOX TV interview, Navarro said: “we are in a sophisticated environment, where the tariffs come into play when China attacks us with their economic aggression, its also information warfare, China is trying to say we created the coronavirus.”
Host Martha MacCallum asks “do you think that the President, I mean sort of, he obviously really wanted to hang on to this trade deal as much as possible, he wanted them to make good on the promises, because there had been progress made on that trade deal. But given everything that has just happened and all the things you just listed, is that over?”
Navarro responds “It’s over. Yes. Here’s I think the turning point. They came here on January 15 to sign that trade deal, and that was a full two months after that virus was out and about. It was a time when they already sent hundreds of thousands of people to this country to spread that virus and it was just minutes after wheels up when that plane took off that we began to hear about this pandemic. And I think that here, everybody here and around this perimeter and around this country now understand that China lied Americans died”
Can you say “whack-a-doodle.?”
The market reaction was swift and messy. Safe-haven demand boosted the US dollar, crushed global equity indexes, S&P futures, and US Treasury yields.
Source: Saxo Bank, Koyfin and IFXA
Upon hearing the news of the financial carnage caused by his comments, Navarro claimed his remarks were taken out of context. They weren’t, but it is easier than admitting you are a moron.
Markets rebounded after President Trump tweeted “The China Trade Deal is fully intact. Hopefully, they will continue to live up to the terms of the Agreement! (10:22 PM · Jun 22, 2020)
EURUSD recouped its Asia losses by the European open, then accelerated higher, rising from an overnight low of 1.1234 to 1.1305. Better than expected German, French, and Eurozone Manufacturing PMI’s boosted the single currency on hopes that post-COVID-19 recovery will be robust.
Traders are looking for further gains above resistance in the 1.1360 to 1.1450.
GBPUSD traded erratically. Prices bounced between 1.2438 and 1.2511 and are trading at the overnight lows, in NY. Traders are less impressed with the UK Manufacturing PMI data (actual 50.1 vs forecast 45) and more concerned with the risk of a no-trade deal EU exit. The short term technicals are bearish while prices are below 1.2520.
Can you say “whack-a-doodle?”
AUDUSD and NZDUSD tracked broad US dollar moves. NZDUSD lagged Aussie moves due to caution ahead of the RBNZ meeting tomorrow.
USDCAD ignored Bank of Canada Governor Tiff Macklem’s remarks and just tracked broad US dollar moves. USDCAD remains rangebound with traders looking for an incentive to drive the currency pair through support at 1.3500. However, they won’t get help from domestic data releases, because there aren’t any. Bearish intraday technicals will keep the currency level drifting lower, today.
USDCAD Technicals: The intraday USDCAD are bearish while trading below 1.3550 today, looking for a break of support at 1.3500 to extend losses to 1.3450 and then 1.3340. A break above 1.3550 suggests a test of 1.3620. For today, USDCAD support is at 1.3500 and 1.3460. Resistance is at 1.3560 and 1.3620. Today’s Range 1.3480-1.3560.
Chart: USDCAD daily
Source: Saxo Bank