It is a deathly dull start to the week in the US and Canada. Holiday’s across large swaths of the globe are to blame. Most of Europe is closed for Easter Monday, as were Australia and New Zealand.
The Canadian dollar has inched higher since the end of last week. USDCAD spiked higher on Thursday, rising from 1.3228 to 1.3335. News of the massive bomb drop on ISIS positions in Afghanistan led to safe haven demand for US dollars. However, that conclusion has a couple of flaws. Specifically, neither Yen or Swiss rallied strongly and they are the traditional safe-haven currencies.
Another consideration to explain the move would be M&A flows. The move occurred after a third major oil company, Chevron, joined, Royal Dutch Shell and CononcoPhillips announced plans to divest Canadian oilsands assets.
Overnight, China released stellar Retail Sales, Industrial Production, and GDP data. Q1 GDP rose 6.9% vs. previous 6.8%, Retail Sales rose 10.9% vs. previous 9.5% and Industrial Production rose 7.6% vs. previous 6.3%)
Aussie and Kiwi rallied on the China data but since both countries were closed for Easter Monday, there was a noted lack of enthusiasm. Risk aversion sentiment due to geopolitical tensions, Turkey’s referendum, and the French election limited AUDUSD gain’s while undermining NZDUSD.
USDJPY inched lower on safe haven selling due to concerns about North Korea.
European markets were closed for Easter Monday.
Turkey President Tayyip Erdogan claimed victory in the referendum. He wants the world to believe that 51.5% of voters want to be ruled by a dictator, although that is not how he spins it.
The US Treasury Report to Congress on Foreign Exchange Policies of Major Trading concluded: “Pursuant to the 2015 Act, Treasury has found in this Report that no major trading partner met all three criteria for the current reporting period”.
During the election, President Trump promised to declare China a currency manipulator. He didn’t. He explained his flip-flop thusly: “Why would I call China a currency manipulator when they are working with us on the North Korean problem? We will see what happens!
Oil prices dipped following the release of the Baker-Hughs rig count report at the end of the day on Thursday. Another increase in US drilling rigs led to WTI prices moving lower but concerns about Syria and global tensions limited the downside.
It will be a slow day in FX. Canadian government offices are closed and there are not any US or Canadian economic releases of note. That will leave “one-off” FX flows, oil prices and Wall Street to drive currency direction. Unfortunately, Wall Street and oil traders will also be looking for directions.
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish awhile trading below 1.3320 looking for a break below 1.3270 for a retest of 1.3225 and then 1.3180. However, a break above 1.3350 would be bullish and target 1.3450. For today, USDCAD support is at 1.3270 and 1.3230. Resistance is at 1.3325 and 1.3350.
Today’s Range 1.3260-1.3330
USDCAD 30 minute