Sterling soared after news that the UK and EU reached an agreement of sorts on the transition out of the European Union. Rumors were rampant in early European trading and GBPUSD rose from a low of 1.3914 to 1.4075 as this is being written. The agreement says that the UK will not participate in EU decision making during the transition but still be bound by single market rules.
The GBPUSD rally also lifted the rest of the G10 majors except for USDJPY.
USDJPY gapped lower at Asia open, recovered and then slid back to the opening low at the European open. Prices have climbed steadily since and are currently trading at 106.20. USDJPY dropped at Asia open in part because Japanese Prime Minister Abe’s popularity plunged after he was linked to a land scandal.
The antipodean currencies bounced inside narrow bands, tracking broad US dollar movements with traders looking ahead to Wednesday’s FOMC meeting. Both currency pairs rallied after the EU/UK announcement.
EURUSD tracked GBPUSD higher on the Brexit rumours and news and is currently trading at 1.2318. The Eurozone Trade surplus narrowed from €22.6 billion to €19.9 billion.
This week’s G20 meeting communique is expected to pledge to continue to fight protectionism, including all unfair trade practices. Russia’s Vladimir Putin was re-elected for six more years, winning 76.7% of the vote. His main opponent, Alexei Navalny, was barred from running.
UDCAD reached 1.3122 in Asia, and the dropped to 1.3078 in early New York trading. Broad US dollar selling has driven USDCAD to 1.3060 at the time of writing. The Loonie remains vulnerable to widening US/CAD interest rate differentials, lagging domestic growth compared to America, household debt concerns, Trudeau, and trade war concerns. The Loonie could get a bit of a reprieve from negative sentiment at the end of the week with the release of Retail Sales and Inflation data.
There isn’t any US or Canadian data on the slate today.
USDCAD Technical Outlook
The intraday USDCAD techncials are bearish following the break of 1.3080 but as long as prices remain above the 1.3000-15 area, the move is a correction. For today, USDCAD support is at 1.3060, 1.3040 ns 1.3020. Resistance is at 1.3080 and 1.3120
Today’s Range: 1.3020-1.3120