FX markets are in “wait and see” mode. UK Prime Minister is attempting to get her revised Brexit plan approved. The BBC reports that Conservative MP’s have been told to back the Brady amendment to the Irish backstop. Another amendment, known as Cooper-Boles is for delaying Brexit beyond March 29. No one, including the 650 MP’s, has a clue as to how events will unfold, except that there will be another vote in February. GBPUSD is bullish above 1.3000 but close to resistance in the 1.3210-50 area. Arguably, a successful vote to delay Brexit reduces the odds for a “no-deal” result and GBPUSD could spike higher, in part because of the still sizeable short positions. However, the EU may not have any interest in further negotiations.
The US stuck it to China’s trade delegation yesterday. On the eve of discussions with China Vice Premier Liu He, on various trade difference including intellectual property practices, the Justice Department charged Huawei and CFO Meng Wanzhou of stealing designs and trading with Iran among other things. That can’t be a good sign for a successful conclusion to the trade talks.
The American’s imposed new sanctions on Venezuela oil in an effort to get President Nicolas Maduro to resign in addition to “countering threats from Cuba and Iran.” National Security Advisor John Bolton reportedly admitted that US strategic interests were involved. He said we think stability and democracy in Venezuela are in the direct national interests of the US. The Venezuelan’s looked at the state of politics in the US and said: “that’s democracy-it looks like the Gong Show.”
Oil prices reacted by inching higher, but the rally is just noise inside the two week $51.40-$54.00/barrel range for WTI.
The G-10 major currencies see-sawed around yesterday’s closing levels in a quiet overnight session. Traders are waiting for UK news or trade talk headlines, to trigger trading action.
Today’s US data releases include Case-Shiller Home Price Indices and January Consumer Confidence. The Canadian calendar is empty.
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish while prices are below 1.3270, looking for a move below 1.3240 to test support at 1.3200. A break above 1.3270 targets 1.3330 and then 1.3380. Longer term, the uptrend line from October is intact while prices are above 1.3200 which is also the 100 day moving average. additional support at 1.3180. A break of this area targets the 200 day moving average at 1.3121 and then 1.3050. For today, USDCAD support is at 1.3230 and 1.3200. Resistance is at 1.3270 and 1.3320