The US dollar is struggling to rally against yen and euro but it has managed to squeak out a minor gain against the Canadian dollar, since the New York session got underway. However, in the larger picture, today’s USDCAD move is just noise. The Bank of Canada Business Outlook Survey is released this morning. Traders will be studying it to see if Canadian business is as negative about the Canadian economy as Bank of Canada Governor Poloz seems to be.
EURUSD price movement have been contained inside a narrow band. Eurozone unemployment and manufacturing PMI reports were as expected and did not have an impact. French election polls have Macon and le Pen neck and neck. ECB officials continued to stress to markets that policy remains unchanged and they are doveish. ECB official Benoit Coeure said that the ECB sees no evidence that its policy is hampering financial markets, according to Reuters.
UK PMI dropped to 54.2 in March (forecast 55.1) and GBPUSD dropped from 1.2552 to 1.2493. Brexit issues are all over the press but not having any real impact on intraday trading.
In Asia, Japan released the Tankan report and Nikkei Manufacturing PMI. The reports were weaker than expected but USDJPY traders didn’t mind.
The Australian dollar was the biggest loser overnight, dropping from 0.7638 to 0.7600 when Retail Sales dropped 0.3% in February (a gain of 0.3% was expected. Traders are now waiting for the Reserve Bank of Australia policy announcement on Tuesday. No change is expected.
WTI oil prices bounced inside a $50.51-$50.81/b range although traders are concerned about a rebound in Libya oil production and an increase in the rig count as reported by Baker-Hughs.
The US dollar could be in for a bit of risk aversion demand following President Trumps comment that he would be willing to act alone to restrain North Korea’s nuclear ambitions, if China doesn’t do something. At the same time, it is Donald Trump speaking, and as it has been clear in the past 3 months, he is all bark and not bite.
US dollar strength could come from stronger than expected ISM Manufacturing PMI (forecast 57.0) and strong construction Spending (Forecast 1.0%)
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish while prices are below 1.3380, looking for a break of support at 1.3270 to extend losses to 1.3210 and then 1.3140. A break above 1.3380 suggests another test of 1.3440. Longer term, USDCAD is just touring inside the broad 1.2960-1.3600 range that has held price action in 2017. For today, USDCAD support is at 1.3320 and 1.3280. Resistance is at 1.3365-85 and 1.3450.
Today’s Range 1.3330-1.3410
Chart: 30 minute