USDTRY jumped to 6.1300 from 5.9841 in Asia and then settled back to 6.0940 by the time New York opened. The US threat of further tariffs against Turkey, the US decision not to allow Turkey to tie in the pastor’s released to payment of fines levied against Turkish banks and a Turkish high court’s denial of Pastor Brunson’s appeal, led to the gains.
The Turkey news was unsettling to FX traders, and they bought US dollars, albeit not aggressively. The G-10 majors opened in New York with small losses.
USDCAD held on to Friday’s inflation report gains. Canada July CPI surprised to the upside with a 3.0% y/y result and USDCAD plunged from 1.3157 to 1.3050. The drop would have been larger except a lot of the gain was due to temporary factors and Core inflation remained steady at 2.0%. On-going Nafta negotiation fears also limited USDCAD losses. The weekend press was full of articles expressing concern that Canada has been excluded from recent talks.
EURUSD drifted lower in a dull overnight session, undermined by Turkey news and a bit of position adjusting ahead of Wednesday’s release of the FOMC minutes. They aren’t expected to offer any fresh insight. Instead, the Friday/Saturday Jackson Hole Symposium will attract attention.
GBPUSD remains under pressure due to bearish technicals and the rising risk of a “no-deal” Brexit. The Rightmove House Price Index for August was -2.3%, m/m. GBPUSD remains in a minor downtrend below 1.2780, looking for additional losses to 1.2650 and then 1.2590.
Asia equity indices were higher, except those in Japan. European bourses rose, and US equity futures point to a positive open for Wall Street. Realistically, the price movements are just noise with traders still on holidays or hoping to get some direction from the FOMC minutes or the Jackson Hole meeting. Traders are also awaiting news on the China/US trade talks, which haven’t even started yet. Those talks could be acrimonious especially if China continues to defy the US and imports oil from Iran.
There isn’t any Canadian or US data of note due today, which suggests a quiet trading session.
USDCAD Technical Outlook
USDCAD is consolidated Friday’s losses inside a 1.3040-1.3105 area. The uptrend line from February is intact while prices are above 1.3010 while the series of lower highs since June has resistance at 1.3170. A break below 1.3010 targets the 1.2940-60 zone while a move above 1.3170 suggests a retest of 1.3385.
Today’s Range 1.3050-1.3110
