USDCAD was at 1.2710 at 4:00 pm EDT, yesterday after falling from 1.2817 and it continued to fall in overnight trading undermined by China President Xi Jinping’s comment on trade and decision not to escalate the war of words. He said dialogue is the best way to resolve disputes. Also, broad US dollar weakness, fresh equity market gains, and the prospect for a positive resolution to the Nafta renegotiations fueled USDCAD losses. The break of support at 1.2750 and 1.2710 hung a target on the 200-day moving average at 1.2630.
The Canadian dollar wasn’t the only currency to post gains against the greenback. They all did, except for the Japanese yen. USDJPY rallied from 106.63 to 107.23 supported by a Nikkei rally, improved risk tone and higher US Treasury yields.
AUDUSD popped after Xi Jinping’s speech while ignoring lower NAB Business Confidence and Conditions readings for March. The NZIER Business Confidence Survey helped NZDUSD which climbed to 0.7347 from 0.7301.
EURUSD traded in a tight 1.2304-1.2334 band. Traders are torn between selling EURUSD on US tightening expectations and buying it in the event of ECB policy normalization. At the moment, mixed economic data doesn’t provide a compelling case for either action. Comments from a couple of ECB officials implied rising caution because of trade and equity market nervousness
Sterling got a bit of a boost from better than expected BRC Retail Sales which helped lift GBPUSD to 1.4178 from 1.4122
There wasn’t much data of note overnight. This morning, the US releases PPI data for March. Traders will be more concerned about Wednesday US CPI release. The focus will be on Trump, trade and the US/Nato’s response to Syria’s reported use of chemical weapons.
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish while prices are below 1.2690 looking for the break of the 100 day moving average at 1.2687 to extend losses to the 200 day moving average of 1.2630. Longer term, USDCAD is in a downtrend while prices are below 1.2800 with the move below 1.2704 targeting 1.2606.