It’s a busy week. The highlight will be the FOMC policy statement, press conference and economic projections on Wednesday. US tariffs on $200 billion of Chinese imports went into effect today. Holidays in China, Japan, and Australia may have exacerbated the down gaps in AUDUSD and NZDUSD at the open after China cancelled planned US trade talks. The gaps were quickly filled. AUDUSD opened in New York with a small gain while Kiwi was unchanged.
Sterling is well above Friday’s Brexit woes lows, climbing from 1.3057 to 1.3135 on profit-taking. There isn’t much in the way of top-tier UK economic data, leaving Brexit headlines to drive direction.
EURUSD is trading at the overnight highs, helped by German IFO Survey data which beat forecasts. Traders are looking ahead to Thursday to see if the Italian budget will adhere to EU guidelines or try to appease those seeking an end to austerity programs. EURUSD is underpinned by the former.
USDJPY is trading at the top of its 112.32-69 range, supported by rising US Treasury yields (10-year 3.083%) and concerns of a hawkish bite from the FOMC statement and economic projections.
Oil prices are firm. WTI is trading at $71.93/barrel after touching $72.35/b overnight. Opec decided not to increase production, despite President Trump’s earlier request to do so to help offset the impact after the US imposed sanctions on Iran oil.
USDCAD drifted higher overnight. Prime Minister Trudeau said that informal talks might occur this week around the UN meeting in New York. The deadline is at the end of the month which is when the Trump administration will send the US/ Mexico deal to Congress.
Canada Wholesale Inventories and Chicago Fed National Activity Index are due today.
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish below 1.3030 and are consolidating losses in a 1.2880-1.2960 range. A break above 1.2960 targets 1.3020 while a move below 1.2910 puts 1.2880 in play. Longer term, the uptrend from May is intact above 1.2880. For today, USDCAD support is at 1.2910 and 1.2880. Resistance is at 1.2960, 1.2980 and 1.3020.
Today’s Range 1.2910-1.2980