May  15, 2019

USDCAD Open (6:00 am EDT) 1.3475-78   Overnight Range 1.3460-91

There is plenty of market risk for everyone, and the US is the common denominator. Trump’s trade war with China has escalated.  The US Navy has taunted China by sailing through the Strait of Taiwan. Trump is still threatening tariffs on imports of European cars. Trump’s tariffs on imports of Canadian steel and aluminum threaten to prevent the USMCA trade deal from being ratified. Drones have attacked Saudi Aramco pumping stations. Britain is under threat of a no-deal Brexit and Italy continues to defy EU budget rules.

Trump’s unilateral decision repudiating the Joint Comprehensive Plan of Action, otherwise known as the Iran nuclear deal, led to today’s inflamed Iran/Middle East/US tensions. Trump levied a host of sanctions, including Iran oil exports and promised stiff fines and penalties to countries and companies that don’t comply.  Iran and the other signatories to the Nuclear deal (UK, France China, Russia and Germany,) are not amused.  The US sent the USSS Abraham Lincoln Carrier strike group to the Middle East in response to “threats” from Iran. The Washington Post reports the US administration is considering plans to increase troop strength to 100,000, prompting Woodstock artist Country Joe and the Fish to start singing “Well, come on all of you big, strong men, Uncle Sam needs your help again…”

USDCAD bounced in a 1.3456-1.3491 range after the Canadian inflation data was released.  Prices settled at pre-data levels within twenty minutes as traders weighed the domestic data, the US data and the current risk sentiment.

Today’s US April Retail Sales report disappointed which overshadowed the upside surprise to the Empire State Manufacturing data.  Retail sales fell 0.2% compared to the forecast for a 0.2% gain.

In Asia, the weaker than expected Australia Wage Price Index (Actual 0.5% vs forecast 0.6%) knocked AUDUSD from 0.6944 to 0.6918 where it sat at the New York open. Prices were further undermined by soft China Retail Sales and Industrial Production data, which also sent NZDUSD lower

Safe-haven demand and falling US Treasury yields sent USDJPY down to 109.49 from 109.69 and those losses increased after today’s US data.

EURUSD didn’t get any joy from Eurozone employment or GDP data.  Prices continue to be weighed down by Italy’s plans to ignore EU budget rules again, with positive US sanctions on EU auto imports, another negative.

GBPUSD dropped from 1.2922 to 1.2854 under the weight of “no deal” Brexit fears and broad US dollar strength.  A Labour Party spokesman said that his party would not support the Brexit bill in its current format which fueled selling.

WTI oil prices dropped from $61.72 to $61.19 in New York this morning, due to the latest International Energy Agency report forecasting a slower global demand growth although sanctions on Iran could limit the impact.

USDCAD Technical Outlook

The USDCAD technicals are unchanged today. The intraday uptrend is intact while prices are above 1.3450, looking for a break above 1.3480 to extend gains to 1.3520./  A break below 1.3450 will lead to 1.3420.  Longer term, the USDCAD technicals are bullish above 1.3270. Today’s Range: 1.3450-1.3510