The US dollar surged on Monday.  The gains were because of widespread risk aversion stemming from any or all of EU/Italian budget tensions, political and Brexit concerns in the UK, expectations for higher US rates and strong growth, free-falling oil prices, and another Wall Street sell-off.  The FX moves were exacerbated by holiday-thinned markets in Canada and the United States.

It was a different story overnight.  News that US Treasury Secretary Steven Mnuchin and China Vice Premier Liu He had restarted trade discussions lifted China equities and led to a drop in USDCNY which in turn, improved risk sentiment.  The US dollar gave back a small portion of Monday’s gains in Europe.

Wall Street closed with losses across the board.  The Nasdaq was the biggest loser, down 2.78%.  US equity futures are pointing to a positive open this morning, following gains in European bourses.


UK politics and Brexit headlines have pummeled GBPUSD.  Headlines about Conservative MP’s bashing Theresa May’s Brexit efforts outweighed reports of an imminent Brexit deal.  GBPUSD closed on Friday at 1.2975, gapped lower to 1.2922 at the Asia open on Monday and then touched 1.2824 just before the London lunch hour.  Prices have inched higher since and are currently trading at 1.2920 after another Financial Times report said a Brexit deal was “within touching distance.”  A rise in UK Average Earnings supported the gains.


EURUSD is being weighed down by contagion fears from the EU/Italy budget spat.  The EU wants Italy to revise its budget, and Italy says ‘No.”. Prices bottomed out at 1.1218 and have drifted higher to 1.1250, supported by mixed to better than expected German ZEW Survey data.


USDJPY bounced between 113.57-114.20.  Prices dropped on Monday and recovered overnight tracking broad US dollar moves and US Treasury yields.


Oil price action has been extremely choppy.  WTI gapped higher at the Asia open rising from $59.85/barrel at Friday’s close to $60.92/b in Asia. On Monday. Prices traded in a $60.35/b to $61.25/b until the European open when the collapsed to $58.79/b.  That bottom was breached overnight, and WTI touched $58.27.  Traders are concerned about an Opec report warning of a 2019 oil supply glut and President Trump admonishing the cartel about cutting production.


USDCAD rallied with the broad US dollar strength with weak oil prices adding another layer of support to the greenback.  There isn’t any Canadian economic data of note on tap this week, leaving oil, equities and broad US dollar moves to dictate direction for the Loonie.

There isn’t any domestic US or Canadian data of note due today.

The USDCAD technicals are bullish.  The intraday uptrend following the break of resistance in the 1.3140-60 area is intact while prices are above 1.3220, and looking to challenge the 1.3250-90 resistance zone.  A topside break would lead to the 2018 peak of 1.3385.  A break below 1.3220 would target 1.3160.  Only a break of 1.3140 would negate the topside pressure.  For today, USDCAD support is at 1.3220 and 1.3180.  Resistance is at 1.3250 and 1.3290.

Today’s Range 1.3190-1.3280