The US dollar surged after a better than expected US employment report on Friday and closed on a firm note. It opened this morning a tad softer against the majors except for the Swiss franc and Canadian dollar.
USDCAD is bid but still below 1.3200. Uncertainty around the US/Canada trade talks is underpinning the currency pair, and it is Milk that is souring the discussions. On August 4, Prime Minister Trudeau emphatically defend Canada’s supply management system and said: “ I have been saying for months if not years, we will protect supply management.” The US is not impressed. On the weekend, US Agricultural Secretary, Republican Senator Tom Reed and National Economic Council Director Larry Kudlow demanded that Canada drop supply management. Mr Kudlow said “Milk, dairy, drop the barriers, give our farmers a break and we can fix some other things,”
Overnight, EURUSD drifted lower in Asia and then rallied in Europe, Traders are reluctant to commit to any direction in case the expected “non-event” ECB meeting is eventful. EURUSD got a little support from a Morgan Stanley report recommending buying Italian bonds.
GBPUSD dropped to 1.2898 then popped to 1.2954 following a rash of UK economic data reports. Manufacturing and Industrial Production data was weaker than expected while July GDP rose 0.3% as forecast. Sterling is trading in New York at the top of its range.
USDJPY traded sideways in a narrow band torn between rising US/China trade risks and expectations for higher US interest rates. The antipodean currencies recouped Asia losses during the European sessions in uninspiring trading. US/China trade war fears are hurting the Australian dollar.
There isn’t any US or Canadian data today, leaving Wall Street and Washington to drive direction.
USDCAD Technical Outlook
The intraday techincals are bullish while prices are above 1.3120, looking for a break above 1.3205 and then 1.3230 to extend gains to 1.3280 and 1.3340. A move below 1.3120 targets 1.3060. Longer term. The long term trend is higher. The uptrend from September 2012 is intact while prices are above 1.2650 on a monthly chart.
Today’s Range 1.3120-1.3220