Yesterday ended with President Trump talking trade. He told Republicans from farm states that the US and China were already negotiating, thanks to his tariffs. He added that he would consider rejoining the TransPacific Partnership if he could get a better deal than Obama. And, for USDCAD traders, the icing on the cake were comments the Nafta talks were going well.
FX markets liked what they heard. The news had a bigger than usual impact because the data cupboard was empty of top-tier data. The US dollar slid in Asia and Europe with AUDUSD and GBPUSD gaining the most.
AUDUSD climbed from 0.7753 to 0.7806. The RBA Financial Stability Report was a tad more upbeat than expected and combined with the prospect of an improved global trade outlook, underpinned the currency. NZDUSD moved higher in concert with the broad US dollar weakness.
USDJPY rose from 107.21 to 107.60 due to the shift to riskier assets. However, the 107.60-80 area has capped all rallies since February 13, and it did so again, overnight.
GBPUSD pushed through resistance in the 1.4240 area, rising from 1.4222 to 1.4294 in part because of stop-loss selling of EURGBP after the break of support at 0.8650. UK rate hike expectations, a lack of negative Brexit headlines and the improved tone for global trade are supporting Sterling.
EURUSD has rallied, albeit reluctantly. Prices ticked up from 1.2318 to 1.2345. Yesterday’s ECB minutes were a tad dovish which is acting as a drag on EURUSD gains.
Oil prices surged again, rising from $66.83 to $67.72 because of the Middle East tensions and the overnight drop in the US dollar.
USDCAD is probing support in the 1.2550 area, after slowly grinding lower in overnight trading. Bearish technicals and hawkish expectations for next week’s Bank of Canada statement are weighing on the currency pair. The increased hopes for a Nafta deal is another factor.
The Canadian dollar has gained 1.9% since Monday’s open, the Australian dollar is up 1.83% and Sterling has gained 1.35%. All three currency pairs are probing major US dollar support areas. There isn’t any Canadian data due today. The US data is second-tier which eliminates the risk for another data-driven US dollar sell-off. Instead, today may be a profit taking day because of the threat of US-led retaliation against Syria on the weekend or another Trump twitter storm.
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish while prices are below1.2595 looking for a break of support at 1.2550 to extend losses to 1.2460. A break above 1.2595 would lead to 1.2620 and then 1.2650. For today, USDCAD support is at 1.2550 and 1.2510. resistance is at 1.2595 and 1.2620
Today’s Range 1.2550-1.2610
