A rumour that President Trump is contemplating walking away from Nafta, has the Loonie on the brink. The rumour is that he could make the announcement just before the G7 Summit that starts this week. USDCAD popped from 1.2975 to 1.3006 on the story, but the rally didn’t get legs (yet) because those rumours have been around for a while. Nevertheless, USDCAD is bid, and it is bid near the recent peak.
Toronto opened, and USDCAD was bid after a quiet overnight session. Bank of Canada Governor Poloz was chirping during the G7 meetings in Whistler. Reuters reported Mr Poloz saying that “Investment is lower than it otherwise would be, but it still is making a significant contribution to growth,’ He was encouraged despite the uncertainty around Nafta. If he followed Trump’s Twitter account, he might not be as upbeat.
USDCAD continues to be supported bt Nafta uncertainty, the recent drop in oil prices and strong US data.
Asia traders just didn’t care, and European traders only had slightly more interest in FX markets. Sterling was the biggest gainer, and the Australian dollar was the biggest loser. The rest of the G7 majors stayed around their New York closing levels.
GBPUSD jumped after UK May Markit Services PMI was 54, rather than the 53.0 forecast. GBPUSD rallied from 1.3304 to 1.3387, where it is trading as this is written.
EURUSD traded sideways in a 1.1684-1.1715 range. Markit Services PMI was 53.8 (forecast 53.9), but any negative sentiment was offset by Eurozone Retail Sales, which rose 1.7% y/y. March data was revised higher.
In Asia, the Reserve Bank of Australia, left rates unchanged, as expected. Minor tweaks to the wording of the statement were considered “dovish, and AUDUSD dropped from 0.7654 to 0.7620 where it opened in New York.
Oil prices are trading at the overnight low. Prices are weighed down by concerns that Opec will increase production and on fears of rising US inventories.
US JOLTS and ISM Non-Manufacturing PMI data are on tap. “
USDCAD Technical Outlook
USDCAD continues to bounce between 1.2900-1.3000 with an upward bias. The uptrend from the May 22 low is in place while prices are above 1.2890, which guards the uptrend from February which comes into play at 1.2750. A break above 1.3005 will lead to 1.3050. A move below 1.2890 will target 1.2850. for today, USDCAD support is at 1.2970 and 1.2940. Resistance is at 1.3005 and 1.3050
Today’s Range 1.2950-1.3035
