USDCAD traders ignored another surge in oil prices and preferred to track broad US dollar moves. Prices climbed from 1.2795 to 1.2825 overnight and then pushed to 1.2535 in early Toronto trading, supported by fresh US dollar strength against the majors. The NAFTA talks are close to the US “cut-off” date for a deal.(May 17) Global news reports that Prime Minister Trudeau and President Trump spoke on the phone and talked of wrapping up a deal immediately. If it happens, USDCAD will be knocking at the 1.2500 door.
The US dollar extended yesterday’s gains, slightly, in a lack-lustre overnight session. Geopolitical tensions, China/US trade talks and firmer US Treasury yields overshadowed economic reports.
EURUSD bounced in a 1.1911-1.1937 band in Europe and Asia. That changed in early New York when prices dropped to 1.1880 as the US uptrend re-exerted itself. Eurozone Q1 GDP was 0.4%, as expected. March Industrial Production was a tick below forecasts but much better than the February data. ZEW Economic Sentiment (May) was 2.4, (forecast 2.0). The German ZEW data was mixed.
GBPUSD bounced in a 1.3570 to 1.3525 range, making most of it when the employment report was released. The jobless rate was unchanged at 4.2%, and Average Earnings, excluding bonus, ticked up to 2.9% from 2.8% previously. It was expected. Prices are back at the bottom of the range, currently.
USDJPY opened in Asia with a bid, supported by broad US dollar strength, Wall Street gains and higher US Treasury yields. A weak Tertiary Industry Index (Actual -0.3% vs forecast -0.2%) and 10-year Treasury yields above 3.0% lifted USDJPY to the top of its 109.67-109.99 range. Prices opened in New York close to the top and USDJPY is still probing resistance at 110.00
AUDUSD found the bottom of its 0.7505-0.7536 range when the minutes of the May 4 meeting were released. They confirmed (again) that Australian rates were not going anywhere for a long time because of low wage growth and soft inflation. Traders were also looking ahead to Wednesday’s Wage Price Index
NZDUSD continued to be weighed down by divergent US and New Zealand interest rate policies.
The US dollar could get another boost today if April Retails Sales beats the 0..5% m/m forecast. March Business Inventories and NAHB May Housing Market Index data are also due. There is no Canadian data.
USDCAD Technical Outlook
The intraday USDCAD technicals are bullish while prices are above 1.2570 and are looking for a break of resistance at 1.2860 to shift the focus to 1.3000. A move below 1.2770 would target 1.27200. For today, USDCAD support is at 1.2770 and 1.2740. Resistance is at 1.2860 and 1.2890
Today’s Range 1.2770-1.2860