The G-7 was a fiasco. It was Canadian Prime Minister Trudeau’s time to shine. The eyes of the world were on Charlevoix, Quebec for the annual gathering of the leaders of the world’s major industrialized nation, (US, Canada, Italy, Germany, France Japan and the United Kingdom) dubbed the G-7.
Prime Minister Trudeau wanted to talk; Gender Equality, Women’s Empowerment, Climate Change and Oceans and have plenty of photo-ops.
President Trump came to talk trade, specifically about how the nations of the world have exploited trading relationships with America. He hijacked the meeting and blew off early. Trudeau attempted to use his post-G-7 press conference to portray himself as a statesman, tough-talking, fearless, world leader and defender of Canadian rights. He accused Trump of “insulting Canadians.”
The speech didn’t go over well with the President. He basically called Trudeau a liar and refused to sign the G-7 communique. He was still angered when he landed in Singapore. He tweeted “Fair Trade is now to be called Fool Trade if it is not Reciprocal. According to a Canada release, they make almost 100 Billion Dollars in Trade with the U.S. (guess they were bragging and got caught!). Minimum is 17B. Tax Dairy from us at 270%. Then Justin acts hurt when called out!” That doesn’t bode well for the Nafta agreement.
USDCAD gapped higher at the Asia open, rising from Friday’s New York close of 1.2930 to 1.2995. That gap will be filled, but there should be plenty of buyers on dips. The Bank of Canada may find it difficult to raise rates in July, as expected, do to the looming trade war threat. USDCAD will also be supported by concern about a hawkish shift in the FOMC statement.
EURUSD traded in a 1.1755 to 1.1819 range in Asia. European’s sold the single currency to 1.1880 where it is trading in New York, ahead of Wednesday’s FOMC meeting and the risk of a “hawkish” outcome.
GBPUSD opened at 1.3385 in Asia and rallied to 1.3440 in Europe. A slew of weaker than expected UK economic reports drove the currency pair down to 1.3350, in early New York trading. The UK trade deficit widened, while Manufacturing and Industrial production shrank.
USDJPY was bid from the open in Asian, rising from 109.23 to 110.05 in early New York. Traders appeared more concerned about the FOMC than the G-7 spat.
AUDUSD drifted higher in Asia although Australia was closed for a holiday. NZDUSD tracked higher in a 0.7015-45 range until mid-morning in Europe. New Zealand coalition government difficulties pushed prices down to 0.7025.
There isn’t any economic data of note from the US or Canada leaving traders focusing on Trade fears and the Singapore Summit.
USDCAD Technical Outlook
The intraday USDCAD technicals are bullish above 1.2875 looking for a break above 1.3010 to extend gains to 1.3065 and then 1.3125. Friday, USDCAD closed at 1.2928. It opened in Asia at 1.2984. The gap will be filled, usually within four days. For today, USDCAD support is at 1.2930, and 1.2875. Resistance is at 1.3010 and 1.3065