May 14, 2019
USDCAD Open (6:00 am EDT) 1.3462-65 Overnight Range 1.3460-85
Oh, what a difference a day makes. Yesterday’s fear of a scorched earth, US/China trade war gave way to very mild optimism that a deal is possible. The US dollar opened this morning with the so-called “risk currencies” (CAD, AUD and NZD) a touch higher while CHF and JPY retreated. European bourses are in the green although Asia equity markets were down.
On Monday, traders were really spooked by China’s retaliation to Trump’s tariffs with tariffs of their own and by an article in a Chinese newspaper. It suggested China should cancel Boeing plane orders and aggressively unload US Treasury bill holdings. Wall Street tanked, and FX traders stampeded to safe-haven currencies.
The moves may have been overdone. The “China selling US Treasuries” story and the Boeing order cancellations were just opinions in a newspaper. Chinese tariffs don’t go into effect until June 1. President Trump suggested the trade talks could go on four another three or four weeks. He still plans to meet China President Xi Jinping in June at the G20.
USDJPY climbed steadily rising from 109.15 to 109.70 in early New York trading, supported by a round of profit-taking and tiny rise in US Treasury yields. AUDUSD and NZDUSD traded sideways in narrow ranges.
EURUSD traded with a mild bid tone inside a tight 1.1220-1.1243 range. German CPI was as expected and was ignored by traders, who were focused on US/China trade news
GBPUSD is clawing back some of yesterday’s losses, having risen from 1.2924 to 1.2953 in New York. Broad US dollar strength and negative Brexit sentiment continue to weigh on the currency pair.
Oil prices have been choppy. WTI traded dropped from $63.25/barrel yesterday to $60.72/b overnight before bouncing to $61.64/b in early New York trading. Traders are torn between fearing a global economic slowdown from a prolonged US/China trade war, and massive supply disruptions from an escalation of US/Iran tensions.
USDCAD Technical Outlook
The intraday USDCAD technicals are bullish while prices are above 1.3440, which is the uptrend line from Friday and it guards the March uptrend line which is at 1.3370. A break above 1.3480 targets 1.3520 while a move below 1.3440 puts 1.3370 in play, again. For today, USDCAD support is at 1.3440 and 1.3410. Resistance is at 1.3480 and 1.3510. Today’s Range: 1.3410-1.3480