US May Durable Goods Orders data was a bit of a mixed result and therefore a wash as far as FX traders were concerned.  The headline number was down 0.6% and gainst a forecast for a drop of 1.0%.  The ex-transportation component was down 0.3% vs forecast for a gain of 0.5%.  The US dollar rose modestly on the news.

The chair of the South Park PTA meeting, upset about the behavior of young school kids, said “Blame Canada”.  Global financial markets, upset about plunging equity markets and trade disruptions are singing “Blame Trump!”

China’s Shanghai Shenzhen CSI 300  index plunged 2.03%  overnight, and some analysts believe it is now in a bear market. The other major Asia equity indices closed in the red, but just marginally.  European bourses were flat, and US equity futures suggest a slightly negative open.

Blame Trump.  He is slapping trade tariffs on friends and foes alike. He has unilaterally declared the Iran Nuclear Deal, void and is threatening sanctions on any country importing Iranian oil after November. He doesn’t care that the EU, Germany, France, Russia and the United Kingdom all believe that the treaty is valid.

Oil prices soared on the news.  WTI rose from $67.70 yesterday morning to $71.15 when New York opened. A surprisingly large drop in US weekly crude inventories  (-9.229 million barrels) reported by API at the end of the day on Tuesday supported the gains.

FX market action was underwhelming. The Japanese yen rose modestly while the rest of the G-10 majors were down slightly, compared to yesterday’s closing levels.

EURUSD chopped about in a 1.1639-1.1670 range in Asia and early European trading.  A drop below 1.1639 just before New York opened shifted the focus to last Thursday’s 1.1506 low.  Different ECB and Fed interest rate outlooks continue to weigh on the currency pair.  In addition, the German political divide over migration issues is threatening Angela Merkel’s coalition government.  In Italy, Prime Minister Conte said that the renewal of sanctions against Russia should not be automatic. Take that Mr. Trump.

Sterling got a short-lived boost to 1.3232 after UK Housing Price data was better than forecast. However, the break below support at 1.3215 targets 1.3110.  Bank of England Governor Mark Carney said that global risks are material and rising and that UK banks can withstand a Brexit shock.

USDJPY is weighed down by safe-haven demand for yen and falling US Treasury yields.  The 10-year Treasury yield is down 1.13% while the Long Bond is down 1.0%.

NZDUSD was the biggest loser overnight, undermined by a drop in Business Confidence.  A better than expected trade surplus was ignored.

Bank of Canada Governor Stephen Poloz gives a speech in Victoria B, C (3:00 pm EDT).  Traders will pay close attention to the press conference for his views on the economic outlook.

USDCAD sentiment is bullish despite signs the rally is getting tired.  Some traders are looking to Mr Poloz to strike an upbeat tone for the domestic economy and leave the door wide open for a July rate hike.  Other traders see Mr Trump’s threat of tariffs on car imports keeping the focus on the 1.3500 area.

USDCAD Technical Outlook

The USDCAD uptrend remains intact while prices are trading above 1.3280.  A move above resistance at 1.3340 will extend gains to 1.3380 and target 1.3500.  However, the upside momentum seems to have stalled. A break of 1.3280 would extend losses to 1.3205.  For today, USDCAD support is at 1.3280 and 1.3240.   Resistance is at 1.3330 and 1.3360.