President Trump took another shot at Canada on the weekend. He tweeted “Deal with Mexico is coming along nicely. Autoworkers and farmers must be taken care of, or there will be no deal. New President of Mexico has been an absolute gentleman. Canada must wait. Their Tariffs and Trade Barriers are far too high. Will tax cars if we can’t make a deal!” That will limit USDCAD downside in the short term.
USDCAD was swept up in the tidal wave of risk-aversion US dollar demand stemming from Trump’s tariffs on Turkey, tweeted on Friday. The plunge in Turkish lira fueled concerns about contagion risks due to some European Bank’s exposures to Turkey, The US dollar rallied across the board, and the Loonie was collateral damage. However, domestic data is robust which is acting as a drag on USDCAD gains.
A semblance of calm returned to Asia FX overnight. Opening jitters boosted the greenback initially, but that move was quickly reversed. However, stock traders were spooked. Major Asia and European equity indices are deep in the red with US equity futures pointing to a negative open on Wall Street.
EURUSD traded in a 1.1366-1.1411 range. The intraday technicals are bearish while prices are below 1.1410, looking for a test of support at 1.1305. A break above 1.1450 would suggest additional gains to 1.1510.
GBPUSD dropped lower in Asia and then traded in a 1.2731-72 range. It opened in the middle of that range in New York. Bearish technicals, no-deal Brexit and concerns about UK banks exposures to Turkey are weighing on the currency.
USDJPY dropped below support at 110.60 and is in a downtrend while prices are below 110.90. Safe haven demand for yen and a drop in US Treasury yields is undermining the currency.
AUDUSD and NZDUSD are suffering from broad US dollar demand and contrasting monetary policies between their respective central banks and the Fed.
There isn’t any Canadian or US data today.
USDCAD Technical Outlook
USDCAD is in an uptrend while prices are above 1.3060, looking for a break above the 1.3180-90 area to extend gains to 1.3240 and then 1.3290. The longer term uptrend is intact above 1.2960. For today, USDCAD support is at 1.3120 and 1.3080. Resistance is at 1.3180 and 1.3220.
Today’s Range 1.3120-1.3180