The threatened US tariffs on $200 billion of Chinese imports could be implemented as early as Friday. The public comment period on the tariff proposals ends today and traders will be watching news wires for updates.
USDCAD drifted aimlessly overnight and opened unchanged from yesterdays close. Chrystia Freeland said the negotiating atmosphere is constructive, but that may have been before Trudeau took a shot at Trump. A feisty Justin said Canada need a dispute resolution mechanism because “Trump doesn’t always follow the rules.”
The odds for a deal improved dramatically this week. Prime Minister Trudeau reiterated Canada would walk away from Nafta if there weren’t both a third party dispute resolution and if Canada culture wasn’t protected. He didn’t say anything about dairy supply management, which Trump insisted, had to go.
The US dollar opened in New York on a mixed note after an uninspiring overnight session. The greenback inched lower against JPY, GBP, and CHF while posting small gains against EUR, and AUD. The New Zealand dollar was flat.
EURUSD weakness was attributed to lower than forecast German factory orders. Trade tensions are being blamed for the miss.
GBPUSD is bid after yesterday’s Bloomberg article, quoting sources” suggesting that Germany has softened its Brexit stance. Other German officials denied the story, but GBPUSD is well supported at 1.2935.
The Swiss franc gained after posting Q2 GDP of 3.4% y/y, well above the 2.4% that was predicted.
Traders are focused on tomorrows US employment report and hoping that today’s ADP data will provide a clue to NFP.
Asia equity indices were lower, The Shanghai Shenzhen CSI 300 dropped 1.03 % to 3,262.88. China promised to retaliate if the US imposes new sanctions and a weaker currency could be one tool.
Eurozone indices are higher, and Wall Street futures point to a positive open. Oil prices continue to be bounced around by supply disruption fears from Iran sanctions and oversupply concerns due to trade jitters slowing global growth.
USDCAD Technical Outlook
USDCAD continues to be supported by the weaker than expected Q2 GDP result and the failure of the Nafta talks to close a deal last Friday. The uptrend on the hourly chart is intact while prices are above 1.3160. A move below that level targets 1.3110 and then 1.3060. A break above resistance in the 1.3205 area targets 1.3260 and 1.3320.