July 4, 2019

USDCAD Open (6:00 am EDT) 1.3072-75   Overnight Range 1.3058-1.3078

FX markets were quiet overnight.  The US won’t be. Draft-dodger, President Trump’s “Salute to America” includes a massive display of US military might in front of the Lincoln Memorial, as part of Washington’s July 4th celebrations.  The demonstration may be aimed at Iran as well.  Trump tweeted “Iran has just issued a New Warning. Rouhani says that they will Enrich Uranium to “any amount we want” if there is no new Nuclear Deal. Be careful with the threats, Iran. They can come back to bite you like nobody has been bitten before!”

The American holiday is a wet blanket for the rest of the global markets.  The major G-10 currencies traded in narrow ranges.  EUR, CHF, GBP and JPY opened virtually unchanged in Toronto, while the commodity currency trio was modestly lower.

Wall Street posted another record close, and Trump took credit, tweeting “Today’s Stock Market is the highest in the history of our great Country! This is the 104th time since the Election of 2016 that we have reached a NEW HIGH. Congratulations USA!”

Eurozone Retail Sales rose 1.3% y/y in May, below the forecast for a 1.6% gain.  The news didn’t have a lasting impact on trading, but it is evidence of the sluggish Eurozone economy.

WTI oil prices chopped about in a $56.50/barrel-$57.54/b range.  Prices are supported by expectations that the Opec/Russia production cap extension and lower US crude inventories.  However, concerns about a deeper global economic slowdown due to the China/US trade dispute are capping gains.

USDCAD is under pressure from bearish technicals and lingering benefits from last week’s better than expected economic data.  Traders are cautious about a further escalation of the China/Canada political dispute that has led to China banning imports of Canadian meat products as well as canola.

The Toronto session will be tranquil in the absence of US markets.

USDCAD Technical outlook

The intraday USDCAD technicals are bearish .  the downtrend from June 20 is still intact while prices are below 1.3110, looking for a break below 1.3050 to extend losses to 1.2990.  A rally above 1.3110 targets 1.3160 but only a move above 1.3360 would negate the downward bias. For today, USDCAD support is at 1.3080 and 1.3050.  Resistance is at 1.3110 and 1.3150.  Today’s Range 1.3050-1.3110

Chart: USDCAD  hourly