New Zealand and Canadian dollars led the major G-10 currency gains at Friday’s close on rumours that the US would delay imposing tariffs on Chinese imports. They added to those gains overnight after President Trump confirmed the rumours.
Trump tweeted “I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues. As a result of these very…… ….productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!”
Asia equity indices soared led by a 5.98% rise in the Shanghai Shenzhen 300 index. European bourses are higher, and New York equity futures point to a strong open on Wall Street. USDJPY rallied, rising from 110.59 to 110.85 however, soft US Treasury yields helped to take the steam out of the move.
EURUSD gains were reluctant, and the single currency only managed to rise from 1.3330 to 1.3360. Traders think that the sooner a Chinese/US trade deal gets done, the sooner Trump turns his sights on the EU and slaps tariffs on auto imports. The ECB’s dovish monetary policy is also limiting upside moves.
GBPUSD popped to 1.3098 from 1.3047 on news that UK Prime Minister Theresa May delayed the vote on the Withdrawal Agreement to March 12. There are also plenty of rumours that Brexit will be delayed beyond the March 29 deadline. The modestly diminished risk that the UK will be able to avoid a “no-deal” Brexit is squeezing short GBPUSD positions.
Oil surged higher on the China tariff delay and expectations for successful US/China trade talks. WTI rose from $56.98/barrel to $57.50/b where it opened in New York.
USDCAD crashed through support in the 1.3150 area on Friday after Retail Sales were a tad better than expected, oil prices surged, and rumours of the tariff deadline extension swirled. It added to the losses overnight and is probing major support in the 1.3110-20 area. There isn’t any notable US or Canadian data due today suggesting oil prices and Wall Street will dictate price direction.
The intrraday USDCAD technicals are bearish while prices are below 1.3150, looking for a break below 1.3115 area to target 1.3050. The 1.3115 zone support stems from the uptrend line from February 2018 and it is also the 38.2% Fibonacci retracement of the February 2018-January 2019 range. The 50% Fibo level is 1.2950 and the 61.8% level is 1.2788. .For today, USDCAD support is at 1.3105, and 1.3050. Resistance is at 1.3150 and 1.3190. Today’s Range 1.3050-1.3140 elega