May 28, 2019
USDCAD Open (6:00 am EDT) 1.3463-66 Overnight Range 1.3436-1.34691
The US dollar opened on a mixed note and not far from yesterday’s Toronto closing levels. President Trump left Japan and trade talks with that nation pushed out until August. USDJPY climbed to its overnight peak in early trading, touching 109.61 before dropping to 109.22 just before New York opened. The drop was fueled by falling 10-year Treasury yields which fell from 2.315% to 2.274%. AUDUSD and NZDUSD traded sideways in narrow trading ranges.
China is finally offering up their version of events that led to the collapse in the US trade talks. The American’s claimed China reneged on earlier agreements. The South China Morning Post, quoting “sources” says that is not true. It was the Americans that “kept adding new demands to the late stage negotiations.” China says the American’s demanded it “completely open its internet and relax controls that require foreign cloud companies to store data in China.” A demand for China to boost US imports by $100 billion/year was another sticking point.
EURUSD is trading heavy. The fall-out from the European Parliament elections claimed a victim as Greek President Alexis Tsipras called an election for June. He is not expected to win. There is also speculation that the EU could fine Italy €4.0 billion over Italy’s budget violations. Eurozone Confidence, Sentiment and Business Climate indices were mixed and had little impact on FX.
GBPUSD chopped about in a 1.2655 1.2700 range. The Conservative party Prime Minister contest is weighing on the currency pair and raising the risk of a “no-deal” Brexit.
Oil prices consolidated Monday’s rally from $58.16/barrel, trading erratically in a $58.75-$59.32/b range. Traders believe the recent plunge from April’s peak of $66.52/b on rising China/US trade tensions was far enough and that that ongoing production cuts, and Venezuela/Iran sanctions will limit further losses.
USDCAD is going with the flow. Broad US dollar strength is bumping into resistance from some speculation for a moderately hawkish Bank of Canada monetary policy statement, although that is a minority view. The BoC is in neutral and likely to stay that way, especially considering the increase in US/China trade tensions and elevated hard Brexit risks.
Case-Shiller Home Prices and Consumer Confidence reports are the only US data on tap
USDCAD continues to bounce inside the well-defined 1.3375-1.3520 range, attracting sellers near the top and buyers near the bottom. The longer term trend is higher. For today, USDCAD support is at 1.3440 and 1.3410. Resistance is at 1.3490 and 1.3520 Today’s Range 1.3430-05
Chart: USDCAD 4 hour