The Loonie is caught in the cross-fire in the latest trade skirmish between China and Russia.USDCAD drifted higher in Asia and accelerated in Europe with traders spooked by the latest Trump antics. The President threatened tariffs on another $200 billion worth of Chinese imports. China called it “blackmail” and said it would respond with “comprehensive quantitative and qualitative measures.”
FX traders responded by buying US dollars. Global equity indices are deep in the red and US equity indices futures point to a negative opening on Wall Street.
USDCAD added to its overnight gains and traded is trading at 1.3288 as this is being written. The broad US dollar strength is occurring at a time when USDCAD is already rising due to US trade threats aimed at Canada, widening CAD/US interest rate differentials, and renewed concerns about oil prices. Opec meets on Friday. WTI oil has been trading with a bearish bias on rumours that the Cartel and Russia will increase production.
EURUSD drifted higher in Asia, rising from 1.1615 to 1.1643 before falling out of bed. Prices dropped to 1.1532 before recovering slightly. The China/US trade spat, German politics and comments by ECB President Mario Draghi reiterating his dovish interest rate outlook weighed on the currency.
GBPUSD followed EURUSD lower. Brexit issues and bearish technicals are undermining the currency. Prices could rebound into Thursday’s Bank of England policy meeting.
AUDUSD and NZDUSD dropped on broad US dollar strength due to the Trump tariff threats.
Today’s US economic data includes May Housing Starts and Building Permits.
USDCAD Technical Outlook
The intraday USDCAD technicals are bullish . The uptrend that began last Thursday is intact while prices are ab ove 1.3205. The break above resistance at 1.3190-1.3205 puts 1.3340 in play. That level is just below additional resistance from the 0.764% Fibonacci retracement level of the May 2017 to September 2017 range of 1.2060-1.3775 For today, USDCAD support is at 1.3205 and 1.3170. Resistance is at 1.3310 and 1.3340.
Today’s Range 1.3210-1.3310