The FX majors opened in New York with tiny gains against the US dollar after a choppy, yet range-bound overnight session. Today’s North American session is likely to be similar. There isn’t any major US or Canadian data available.
Traders will be on full alert in case of fireworks resulting from today’s President Trump/European Union President Juncker meeting on trade. The “Titan of Tweet” had this to say: “The European Union is coming to Washington tomorrow to negotiate a deal on Trade. I have an idea for them. Both the U.S. and the E.U. drop all Tariffs, Barriers and Subsidies! That would finally be called Free Market and Fair Trade! Hope they do it, we are ready – but they won’t!”
EU Trade Commissioner Cecilia Malmstrom said the EU is ready to slap tariffs on $20 billion of US imports if the US hits them with auto tariffs.
Trade war fears and caution ahead of Thursday’s ECB policy meeting and US Durable Goods data will ensure more range trading today.
In Asia, Australian and New Zealand economic reports disappointed traders and both currency pairs were sold. New Zealand posted a trade deficit for June (forecast $200 million) and the year over year deficit widened. AUDUSD traders were expecting an upside surprise in the inflation data. It didn’t happen. Q2 CPI was 1.9%, y/y as expected. AUDUSD dropped from 0.7448 to 0.7393 but rebounded to 0.7414 in New York trading. NZDUSD fell from 0.6816 to 0.6788 but recovered to 0.6808 by the New York open.
USDJPY bounced inside a 111.03-111.37 range. US Treasury yields, despite drifting lower, support prices but risk aversion fears due to trade tensions limit gains.
In Europe, the German IFO index was better than forecast but below the previous month’s results. June IFO Business Climate was 101.7. (forecast 101.5, May 101.8) EURUSD which had inched lower in Asia rallied from 1.1676 to 1.1704 at the New York open. GBPUSD bounced within a 1.3139-1.3172 range.
USDCAD is suffering from a domestic data vacuum. Prices are tracking broad US dollar moves. US/CAD trade fears are tempering Canadian dollar demand stemming from the recent hawkish Bank of Canada outlook. President Trump appears to have relegated Canada to the back of the line and is concentrating on completing a deal with Mexico.
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish while prices are below 1.3160. A break of support at 1.3110 would target 1.3050 and then 1.3010. A move above 1.3160 puts 1.3190 in play. A break above 1.3190 targets 1.3385. For today, USDCAD support is at 1.3110 and 1.3080. Resistance is at 1.3160 and 1.3190.
Today’s Range 1.3110-1.3160