The Canadian dollar outperformed the rest of the G-10 major currencies overnight and is the only G-10 major to open with a gain against the US dollar, compared to yesterdays close.
USDCAD dropped in early Asia trading alongside rallies in AUDUSD and NZDUSD sparked by President Trump’s comments on China trade talks. He said that the talks were “going well” and described the March 1 deadline as “not a magical date.” The antipodean currencies were unable to hang on to their gains, and they opened in New York with small losses compared to yesterdays close. USDCAD is probing support in the 1.3180 level in early trading and looking to test additional support at 1.3150, the 200 day moving average.
USDJPY traded choppily inside a 110.57-110.93 range. Weak Japanese trade data, including a drop in exports, boosted the currency pair while a dip in US Treasury yields led to selling pressure.
UK politics and Brexit have knocked GBPUSD for a loop. Yesterday, optimism ahead of today’s meeting between UK Prime Minister Theresa May and European Commission President Jean-Claude Juncker lifted GBPUSD from 1.2901 to 1.3075 overnight. Prices dropped to 1.3020 in Europe on news that three conservative MP’s quit the party to join a new independent group.
EURUSD bounced in a 1.1332-1.1357 range and is currently probing the bottom area. Prices are supported by expectations today’s FOMC minutes will reconfirm the dovish policy outlook. However, a dovish ECB and the possibility of US tariffs on Eurozone cars may be limiting topside gains, even though any US action is a couple of months down the road.
WTI oil prices opened well-below their overnight peak of $56.40/barrel due to renewed concerns about the impact of US shale oil on global supply. Yesterday, the Energy Information Administration (EIA) said shale production will hit 8.4 million barrels/day next month. That dampens the impact from US sanctions against Iran and Venezuela.
There isn’t any data of note until the FOMC minutes release at 2:00 pm EST
The USDCAD technicals turned bearish with the break below uptrend line support at 1.3230 followed by further weakness below the 1.3210-20 area. A move below support at 1.3180 targets the 200 day moving average at 1.3150. Longer term, the break of 1.3228 (38.2% Fibonacci of Apri1 2018, low of 1.2526 to January 2019, peak of 1.3665) targets the 61.8% level of 1.2960. For today, USDCAD support is at 1.3180, 1.3150 and 1.3120. Resistance is at 1.3210 and 1.3230. Today’s Range 1.3120-1.3220