In the standoff that has become the US/Canada trade negotiations, Canada blinked first. Late yesterday afternoon, Reuters reported that Canada was willing to offer concessions and give the US increased access to the domestic dairy industry.
That was huge news, especially considering that as recently as August 4, Prime Minister Trudeau was insisting that Canada’s supply management system was not on the negotiating table, He said “the US administration is targeting supply management. They want us to eliminate supply management in Canada. I can tell you here today, as I have been saying for months if not years, we will protect supply management.”
USDCAD plunged on the news, dropping from 1.3130 to 1.3042 instantly. It spent the Asia and European sessions consolidating the losses inside a 1.3046-1.3077 range.
The US dollar opened in New York on a mixed note after a very quiet, and dull overnight session. CAD, JPY and GBP are a tad higher while EUR and CHF are a tinge lower. The antipodean currencies are unchanged.
EURUSD is marking time ahead of Thursday’s ECB policy meeting although markets are not expecting any new developments.
Sterling is being tossed about by Brexit headlines within a 1.2950-1.3050 range. Traders are also leery ahead of Thursday’s Bank of England policy meeting. Governor Mark Carney could upset markets again if he expands on his earlier comments/warnings about the risks of Brexit.
AUDUSD and NZDUSD traded similarly. Both lost ground in Asia and then recouped the losses in Europe, to open unchanged for the day.
Canada Capacity utilization data and US PPI reports are the only data releases today. USDCAD traders will be looking for headlines from the Liberal caucus meeting in Saskatchewan and Trudeau’s comments about the trade discussion.
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish after break through the uptrend line from the end of August that was at 1.3120. The subsequent plunge has broken 38.2% and 50% Fibonacci retracement support levels of the August 30-September 6 range of 1.2900-1.3220. A move below 1.3020 targets 1.2977 and then 1.2900.
Today’s Range 1.2990-1.3070