Canada’s Chrystia Freeland is in Washington for another round of trade talks. President Trump said there wasn’t a political necessity to keep Canada in the new Nafta deal. Prime Minister Trudeau responded by saying Canada won’t sign an agreement without a dispute resolution mechanism or exemptions for cultural industries. He didn’t say anything about protecting the dairy supply management program. Trump’s threats helped boost USDCAD to its current 1.3190 level.
The Bank of Canada policy meeting will likely be a “non-event” for markets. They will leave rates unchanged and issue a benign statement.
GBPUSD is the worst performing G-10 currency compared to yesterday’s closing levels. It couldn’t get any traction from the better than expected UK Services PMI data which rose 54.3 in August. (Forecast 53.7) Instead, traders were focused on Brexit issues and the UK governments apparent lack of a plan to deal with the EU. Former Bank of England governor Mervyn King said the UK government had left the country without a credible bargaining position. GBPUSD dropped from 1.2869 to 1.2787 before bouncing slightly.
EURUSD peaked at 1.1607 in Asia and headed lower in Europe, finding a bottom at 1.1543 before bouncing to 1.1580 in early New York trading. Eurozone Services PMI and Retail Sales data were as expected and nonfactors in trading.
In Asia, Australia Q2 GDP rose 0.9%, beating forecasts for a 0.7% q/q rise. AUDUSD rallied, rising from 0.7170 to 0.7216. Prices reversed after China PMI Caixin Service PMI data missed forecasts. (Actual 51.5 vs forecast 52.7) AUDUSD dropped to 0.7145 and has since bounced to 0.7173 in New York trading. NZDUSD was more subdued. It traded in a narrow range and opened unchanged this morning.
USDJPY traded in a 111.40-70 range, supported by broad US dollar strength and expectations for a robust nonfarm payroll report on Friday.
Asia equity indices finished with losses, and European bourses are in the red. US equity futures point to a negative open on Wall Street.
US and Canada trade reports are on tap this morning, but traders are more concerned with trade developments and Friday’s US employment data.
.USDCAD Technical Outlook
The intraday USDCAD technicals are bullish with yesterday’s break above the 1.3120 signalling a retest of the 1.3385 level is likely. The intraday uptrend is intact while prices are above 1.3160 looking for a break of 1.3205 to 1.3240 and then 1.3290. A move below 1.3160 points down to 1.3110.
Today’s Range 1.3160-1.3240