June 26, 2019

USDCAD Open (6:00 am EDT) 1.3151-54      Overnight Range 1.3145-1.3194

Chinese consumers may soon be asking “where’s the (Canadian) beef?”  China said they would stop excepting Canadian beef and pork products, effective June 25, due to a falsified document.  Canadian officials agree that China may have a point.  Nevertheless, the issue probably disappears around the time Canada releases incarcerated Huawei CFO, Meng Wanzhou.

The news helped to underpin the US dollar in Asia, but the real support came when St Louis Fed President James Bullard told Bloomberg Television that a 50-point US rate cut would be “overdone.”  Fed Chair Powell’s speech was a wet-noodle, and he repeated that the Fed is “closely monitoring conditions.”

Today’s US Durable Goods Orders data was met with a collective yawn. (May actual -1.3% vs forecast -0.1%, ex-Transportation 0.3% vs forecast 0.1%)  The decline in the headline number was expected because of Boeing’s issues.

In Asia, the RBNZ left the OCR rate unchanged and issued a dovish policy statement.  The RBNZ warned that because of “the weaker global economic outlook and the risk of ongoing subdued domestic growth, a lower OCR may be needed over time to continue to meet our objectives.”  The outcome was expected.

The Commodity bloc currencies rallied after Treasury Secretary Stephen Mnuchin said that a US/China trade deal was 90% done. Sceptic’s believe it is a marvellous accomplishment considering that there haven’t been any reports that the two sides were even talking in the past month.

The trade talk news boosted European equities and US equity futures alongside USDJPY, which climbed from 107.11 to 107.70.  A small rise in US Treasury yields helped.

EURUSD traded sideways in a narrow 1.1354-73 band.  Traders ignored weaker than expected German Consumer Confidence.  (Actual 9.8 vs previous 10.1)

Sterling picked up the slack from the Euro.  GBPUSD climbed steadily in Europe, rising from 1.2664 to 1.2706.  Trader’s may have been reacting to Bank of England Governor Carney’s remarks to the UK parliament.  He didn’t say anything new or profound and stated the obvious when he said “market expectations of a “no-deal” Brexit have risen in recent months.

Oil prices continued to advance.  Yesterday, API reported a 7.55 million barrel drawdown in US crude inventories, which supported prices, as did supply disruption concerns from the Iran/US tensions.  WTI has intraday uptrend line support at $57.00/barrel that targets resistance in the $60.00/b area.

Today’s US Durable Goods Orders are expected to be soft, in part because of Boeing’s issues. Wholesale Inventories and Goods Trade balance are also due.  The Canadian economic calendar is empty.

USDCAD Technical outlook

The intraday USDCAD technicals are bearish following the break below 1.3230 with a minor downtrend intact while trading below 1.3190.  A break through support in the 1.3120-50 area targets 1.2956, the 50% Fibonacci retracement level of the February 2018-January 2019 range.  A move above 1.3250 would negate the downside pressure and suggest a period of 1.3150-1.3350 consolidation.  Today’s Range 1.3130-1.3210 

Chart: USDCAD  1 day