The Canadian dollar and the antipodeans are underperforming despite broad US dollar weakness against the majors. Interest rate differentials and soft commodity prices are exacting a toll.
Sterling soared following a stronger-than-expected UK inflation report. GBPUSD rallied from an overnight low of 1.2342 to 1.2473 and managed to stay close to that peak in early New York trading. Traders see the CPI results as vindication for Kirsten Forbes call for a rate hike at last week’s Bank of England meeting.
EURUSD climbed steadily in Asia and accelerated through key resistance in Europe. The strong performance in the French Presidential debate by the centrist candidate Emanuel Macron squeezed EURUSD short positions further, triggering stop loss buying on the move above 1.0775.
In Asia, the RBA minutes pointed out pitfalls from the housing market and rising personal debt which drove AUDUSD down from 07737 to 0.7698. The move was reversed in Europe on broad US dollar weakness.
USDJPY touched 112.25 in early Tokyo trading in a continuation of the New York afternoon retreat. That move was reversed on improved risk sentiment.
Oil prices inched higher on talk that Opec production cuts could be extended beyond the end of June. WTI inched higher overnight but the rally stalled at the downtrend line from March 9.
This morning’s US and Canadian economic data will be forgotten as soon as it is released. Wednesday’s Canadian federal budget poses a risk to USDCAD traders if it is viewed as anti-investment due to new and higher taxes. A slew of Fed speakers, including Janet Yellen are on tap on Thursday. President Trump is also scheduled to deliver a speech. Those “verbal’ risks may temper trading enthusiasm today.
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish while prices are below 1.3440, looking for a break below 1.3290-10 area to extend losses to support in the 1.3240-60 area. If broken, USDCAD will drop to 1.3210 A break above 1.3370 would target 1.3440.
Today’s Range 1.3270-1.3360
USDCAD 1 hour