Asia markets were gripped in a fresh wave of risk aversion to start the week.The negative sentiment was fueled rising tensions between the US and Saudi Arabia, escalating anti-china trade rhetoric from the US, and reports US Secretary of Defense James Mattis may be quitting. GBPUSD gapped lower after disappointing Brexit headlines taking EURUSD, AUDUSD, and NZDUSD with it. USDJPY edged down as well.
All of those moves were reversed in European trading.The US dollar started trading in New York with gains across the board, led by a 0.60% rise in the Swiss franc.GBPUSD opened unchanged from Friday’s close.
European stock markets dropped in early trading, but the major bourses are in flat to positive which helped supported EURUSD. The single currency is also benefitting from stable Italian bond yields. US equity futures are negative but off their worst levels.
GBPUSD has recovered from earlier lows triggered by news that the EU and Britain could not agree to an Irish border solution that wouldn’t cause the Irish Democratic Unionist Party (DUP) to balk, and bring down Theresa May’s minority government.
President Trump took more shots at China in a 60 minutes’ interview on the weekend. He didn’t say anything new but repeated his threat for more sanctions. Then he turned his sights to the Middle East. He is weighing some sanctions against the Saudi’s unless they provide answers about the disappearance of a Washington Post journalist.
Oil prices spiked on the news, rising from $71.52 to touch $72.67 before retreating to $71.86 at the New York open.
USDCAD was ignored. Prices drifted in a narrow range. The Bank of Canada Business Outlook survey is due this morning, If this survey is optimistic, it could suggest a hawkish outlook for October 25 policy meeting statement and upgraded Monetary Policy Report.
US retail Sales are expected to rebound from August’s 0.1% rise to 0.5% m/m today.
USDCAD Technical Outlook
The USDCAD uptrend from October 1 is intact while prices are above support in the 1.2990-1.3000 area. Prices are is a minor downtrend inside the 1.3000-1.3080 band which has contained moves since last Wednesday. A break below 1.2990 would lead to 1.2950 while a break above 1.3040 targets 1.3080.
Today’s Range 1.2990-1.3080