President Trump took another shot at China and China responded in kind. The weekend’s exchange of tariffs between the two trading giants wasn’t unexpected, and FX markets didn’t get spooked.
China was closed for a holiday. The US dollar traded very close to Friday’s New York closing levels. The Canadian dollar gained the most, rising 0.30% while Sterling was the big loser, dropping 0.34%.
There weren’t any top-tier economic reports from any centre except for Japan, where Merchandise Trade data was released.
The June 22 Opec meeting is a key focus. Bloomberg reports that Russia wants higher production quotas while Iran wants to leave things as they are. Also, China’s threat to put tariffs on US oil imports muddies the supply/demand equation. WTI oil rebounded from the $63.
The ECB Forum on Central Banking in Sintra, Portugal starts today. There are a lot high-level central bank speakers including, Mario Draghi, and Fed Chair Jerome Powell.
German politics could undermine EURUSD which is already under pressure following last weeks ECB/FOMC meetings. The media is reporting tensions between Angela Merkel and her coalition partner which worse case, would see Ms Merkel ousted as Chancellor.
Sterling traders are awaiting Thursday’s Bank of England policy meeting suggesting a rangebound GBPUSD in the days ahead.
USDCAD has retreated from the overnight peak, but the sentiment is bullish. The break of key technical resistance in the 1.3040-60 are and again at 1.3125 has shifted the target to 1.3350 and then 1.3550. Tariffs and the heightened risk of a Nafta collapse have underpinned the currency. Canada CPI and Retail Sales are due at the end of the week. Higher inflation and better than expected retail sales numbers, combined with the recent Canadian dollar weakness, would give the Bank of Canada plenty of room to raise interest rates in July.
There isn’t any economic data of note from the US or Canada today.
USDCAD Technical Outlook
The intraday USDCAD technicals are bullish above 1.2920 supported by the break above 1.3050 which targets the overnight high of 1.3206 and then 1.3270 A break below 1.3160 would extend losses to 1.3120. For today, USDCAD support is at 1.3160 and 1.3120. Reistance is at 1.3205 and 1.3230.
Today’s Range 1.3160-1.3210