President Trump channelled his inner “Prince” yesterday, in response to the 831.383 plunge in the Dow Jones Industrial Average. He blamed the Fed for the rout saying “The Fed has gone crazy.” It never dawned on him that his trade war on China, and sanctions on Iran, may have contributed to the overdue profit-taking sell-off. If it did, it would have been “crooked Hillary’s” fault.
The US equity woes spilled over into Asia where the Nikkei dropped 3.88%, the Hang Seng lost 3.54%, and the Shanghai Shenzhen plunged 4.80%. Europe Bourses suffered the same fate but to a lesser degree. The DAX is down 1.16% as of 1020 GMT. US Treasury Yields consolidated yesterday’s losses but did not extend them.
The US dollar added to yesterday’s losses in early New York trading, led by robust gains in the Antipodean currencies. However, although significant support/resistance levels in the G-10 majors have been tested, they are still intact. Wall Street’s performance will dictate US dollar direction today although a higher than expected US inflation reading would monkey up the works. September Core CPI is forecast to rise 2.3% y/y, compared to August’s 2.2% gain. An upside surprise could spook Wall Street again but should underpin the greenback due to the risk of a more hawkish Fed, despite what Trump says.
USDCAD is collateral damage. US dollar direction vs the majors will dictate Canadian dollar direction. Today’s New Housing Price data should not be a factor for FX traders
USDCAD Technical Outlook
The intraday USDCAD technicals are bullish above 1.2930, supported by yesterday’s move above 1.3010, looking for a break of resistance at 1.3080 to extend gains to 1.3130 and then 1.3280 For today, USDCAD support is at 1.3030 and 1.2980. Resistance is at 1.3060, 1.3080 and 1.3130.
Today’s Range 1.3020-1.3120