It hasn’t been a good twenty hours for the Canadian dollar. It has been even worse for Canadian softwood lumber exporters. American lumber barons successfully persuaded President Donald Trump to impose 20% countervailing duties on Canadian imports of softwood lumber and there isn’t really anything Canada can do about it. Canadian dairy farmers are crying and they haven’t even spilled their milk, yet. That’s because, Mr. Trump has indicated that they are on his hit list.
USDCAD broke above the March peak of 1.3535 in Asia and hasn’t looked back.
The Canadian dollar is being hit from another side as well. There is ongoing demand for EURCAD in concert with the post Macron win in round 1 of the French election.
Overnight, FX trading was subdued, in part because of the Anzac Day holidays in Australia and New Zealand. EURUSD traded with a bid within a narrow 1.0850-1.0897 range and is near the top of that range in New York trading.
USDJPY traded higher supported by demand for EURJPY, firm equity markets and the modestly improved risk tone
Sterling rose from a low of 1.2775 in Asia to 1.2825 in early New York trading. Nevertheless, the move is merely noise inside the 1.2770-1.2860 range that has contained moves since April 19.
WTI oil prices are pressured by concerns of stubbornly high crude inventories and skepticism about Opec extending production cuts. WTI dropped from $49.51/b in Asia to $49.03/b as of 1350 GMT
FX traders will be cautious ahead of Wednesday’s tax plan announcement by President Trump and ongoing sabre rattling in between North Korea and America. Today’s US housing data should not have much of an impact on FX markets
USDCAD Technical outlook:
USDCAD broke the 2017 peak of 1.3598 in New York trading although the follow through was less-than inspiring. However, that sets the stage for more gains to 1.3850 which is the 61.8% Fibonacci retracement level of the 2016 range.
The intraday USDCAD technicals are bullish. The break above the March peak of 1.3535 and the 2017 high of 1.3598 targets 1.3660 and then 1.3740. For today, USDCAD support is at 1.3550 and 1.3520. Resistance is at 1.3610 and 1.3640
Today’s Range 1.3570-1.3640
Chart: USDCAD 30 minute