Traders used the weekend to reassess their outlook for increased trade tensions and concluded that, for the time being, they were just a tempest in a teapot. The US exempted South Korea from steel tariffs. Asia equity indices inched higher and closed with tiny gains (compared to last week’s losses), although the Australian ASX200 and the Shanghai Shenzhen weren’t included.
The US dollar slid, losing ground against the major G10 currencies except for the Japanese yen. USDJPY ticked higher from the open, rising from 104.57 to 105.14
The antipodean currencies rallied. NZDUSD climbed from 0.7232 to 0.7295, outperforming AUDUSD which rose from 0.7697 to 0.7747. Kiwi had the added benefit from a better than expected Trade Balance report, posting a $27 million surplus in February.
EURUSD opened in New York just below the overnight peak of 1.2415, supported by diminished global trade war risk and gains in European equity indices.
Sterling is on firm footing, cracking resistance at 1.4200 and trading in New York at 1.4224. The outlook for higher rates and the Brexit transition deal have underpinned the currency pair.
USDCAD bounced inside a 47 point range and had traded back towards the top in early New York trading. The impact from Friday’s higher than expected inflation reading has dissipated, somewhat. Traders do not seem to be overly concerned (yet), with President Trump’s announcement that Canada will face steel and aluminum tariffs on May 1.
Today’s US data includes the Chicago Fed National Activity Index and the Dallas Fed Manufacturing Business Index. They shouldn’t have any impact on FX. A gaggle of Fed speakers (Dudley, Mester and Quarles) are on tap today.
US equity futures suggest that Wall Street may staunch the bleeding and open in positive territory.
USDCAD Technical Outlook
The intraday USDCAD technicals are bullish after this mornings break of the steep downtrend line from the March 20 peak of 1.3100. The move above 1.2870 opens the door to 1.2940, wwith 1.3000 lurking in the background. Failure to break 1.2940 will keep the focus on support at 1.2830 and risk additional downside. For today, USDCAD support is at 1.2840 and 1.2810. Resistance is at 1.2895, 1.2920 and 1.2940
Today’s Range: 1.2840-1.2940