June 6, 2019

USDCAD Open (6:00 am EDT) 1.3402-05    Overnight Range 1.3393-1.3428

EURUSD dipped to 1.1204 from 1.1230 on the release of the ECB policy statement than soared to 1.1270, all within minutes.  Prices extended their gains when ECB President Mario Draghi’s press conference started.  The ECB left interest rates unchanged and said they would stay that way until the first half of 2020.  The April statement said rates would be unchanged until the end of 2019.  Mr Draghi noted downside economic risks from global tensions and protectionism, had risen.

The overnight session was somewhat subdued, and the US dollar gave back a small portion of yesterday’s gains. Traders shifted their attention to this morning’s ECB policy meeting. EURUSD traded sideways in a 1.1223-1.1241 range and ignored  Eurozone GDP and employment change data, which were unchanged.

In Asia, AUDUSD shrugged off news that the trade surplus narrowed modestly in April as it tracked broad US dollar moves.  NZDUSD flatlined, but still supported by yesterday’s comments from RBNZ Assistant Governor Hawkesby that interest rates would remain unchanged for the foreseeable future.

USDJPY was weighed down by Trump’s threat of 5% tariffs on Mexico which go into effect on Monday.  Trump tweeted that “not enough progress was being made on immigration reform.”

The hopes that American and Mexican officials which managed to avoid the tariffs capped USDMXN at 19.8745 which is a far cry from pre-Trump threat levels of 19.0410, a week ago.

GBPUSD is consolidating inside yesterday’s 1.2671-1.2742 range.  The leadership race to replace Theresa May and the risk of a no-deal Brexit may cap topside moves.

President Trump is opening up a new front in his trade war with China.  This time he is pondering selling Taiwan $2.0 billion worth of tanks and weapons which keeps risk aversion sentiment simmering.

Oil prices are above yesterday’s lows but retreated from their overnight peak of $52.22 in early New York trading.  Yesterday’s EIA report that US crude stocks rose 6.77 million barrels reinforced the view that a global growth slowdown means supply will outstrip demand.

USDCAD tested support in the 1.3360-70 area yesterday, and it held.  Prices drifted higher and consolidated in a 1.3403-1.3428 range overnight. Speculation that the BoC may cut interest rates by October and the steep decline in WTI oil prices since the end of April suggest limited USDCAD downside.  Canada’s trade deficit for April narrowed more than expected, which put downside pressure on USDCAD.

US Initial jobless claims were 218,000 compared to forecasts for a 215,000 result

USDCAD Technicals

The intraday USDCAD technicals are bearish while prices are below 1.3420, looking for another test of support in the 1.3360-70 area.  Below 1.3360 suggests further losses to 1.3320 and then 1.3250.  A move above 1.3440 would shift the focus to 1.3480.  For today, USDCAD support is at 1.3360.  Resistance is at 1.3420, and 1.3480.  Today’s Range 1.3370 1.3420

Chart: USDCAD hourly