USDCAD is trading above the mid-point of its overnight range and did not get much benefit from this mornings Q4 GDP data. (Q4 GDP Actual 1.7%, q/q vs forecast 2.0%,q/q) December GDP rose 0.1%, the same as it did in November. Domestic economic data is taking a back seat to Trade woes and equity drama.
President Trump levied a 25% tariff on steel imports and a 10% tariff on aluminum, yesterday afternoon, throwing markets for a loop. The US dollar finished the day with losses all around. Overnight, FX markets were unsettled. Euro, Yen, Swiss and Sterling added to their gains while the commodity currency bloc retreated from their best levels.
USDJPY dropped as traders became risk averse with Japanese year-end repatriation demand for yen exacerbating the move. USDJPY dropped from 106.28 to 105.54 where it opened in New York. A comment by BoJ Governor Kuroda may have undermined the currency pair. According to Reuters, he told the Japanese parliament; “The BOJ’s board members expect that prices will reach 2 percent around fiscal 2019. If this happens, there’s no doubt that we will consider and debate an exit.”
AUDUSD was steady, trading in a narrow 0. 7747-0.7772 band, NZDUSD traded sideways in Asia and then dropped from 0.7277 to 0.7234 in Europe
EURUSD hung on to yesterday’s gains. The Trump tariff’s lifted the single currency from 1.2180 to 1.2275. Overnight, prices drifted in a 1.2252-1.2297 range. Prices cleared 1.2300 in early New York trading with traders ignoring mixed Eurozone data. German retails missed forecasts, and Eurozone PPI data was soft. Italy’s general election on Sunday does not appear to be an issue.
Sterling go a bit of a lift from the Construction PMI which came in at 51.4 beating the forecast of 50.2. Traders are eagerly awaiting Prime Minister Theresa May’s Brexit speech, later this morning.
Global equity indices racked up big losses, thanks to Trump. Wall Street is poised to open with losses, as well.
Oil prices dropped with risk aversion, equity market weakness and a rise in US crude inventories all playing a role. WTI dropped from $61.38/b to $60.68.
USDCAD has rocked a 1.2820-90 range since yesterday afternoon and is starting today’s session just above the mid-way point. The Trump tariff’s increase the uncertainty around the Nafta negotiations which suggests the Bank of Canada will stick to their dovish script next Wednesday.
Michigan Consumer Sentiment (forecast 99.5 vs previous 99.9) is the only US data of note.
FX traders will take their cue from Wall Street.
USDCAD Technical outlook:
The intraday USDCAD technicals are bullish and looking for a test of 1.2915. Strong resistance in the 1.2660-1.2720 has been crushed, leaving the door open for addition gains. A break below 1.2720 would argue for 1.26650-1.2780 consolidation. For today, USDCAD support is at 1.2740 and 1.2720. Resistance is at 1.2790 and 1.2830.
Today’s Range 1.2740-1.2830
Chart: USDCAD 4 hour
USDCAD Technical outlook:
The intraday USDCAD technicals are bullish while prices are trading above 1.2820, looking for a break above 1.2915 to extend gains to 1.3030. A move below 1.2820 would lead back to 1.2780. For today, USDCAD support is at 1.2820 and 1.2870. Resistance is at 1.2880, 1.2915 and 1.2950
Today’s Range 1.2820-1.2915