Asia FX trading was quiet because of ANZAC holidays in Australia and New Zealand. Thursday’s European Central Bank policy meeting and an empty data cupboard encouraged limited activity.
FX trading wasn’t a total write-off. The US dollar traded higher across the board due to 10-year US Treasury yields cracking 3.0% (Currently 3.018% after touching 3.032% earlier)
President Trump’s comments are clouding the landscape. He is unhappy with the Iran nuclear deal while the European Union is happy with the status quo. Oil prices have been roiled by these discussions, but signs that Trump may comprise have pulled WTI prices from their peak.
The President sounded upbeat on the outlook for a resolution to the US/China trade spat and suggested that a NAFTA deal was close. The FX reaction to these developments has been underwhelming.
The Canadian dollar remains under pressure. The Bank of Canada has indicated that it is in no hurry to raise interest rates. They dismissed rising inflation numbers as “temporary” and highlighted global trade risks as concerns. CAD/US interest rate differentials have widened in the US’s favour while the Canadian dollar remains decoupled from oil price moves.
AUDUSD and NZDUSD were sold on the back of bearish technicals and higher American rates. AUDUSD is hovering above strong support at 0.7570 while NZDUSD has broken below major support at 0.7100. USDJPY tracked rising Treasury yields and rallied from 108.79 to 109.25
In Europe, the lack of domestic data ahead of the ECB meeting led to EURUSD selling on rising US rates and falling equity markets. The ECB is expected to maintain their dovish stance.
Sterling continues to be undermined GBPUSD selling as overbought positioning gets adjusted
Treasury yields, Equity markets, Trump and the upcoming ECB meeting, will provide the trading fodder for today.
USDCAD Technical Outlook
The intraday technicals are bullish. The break above resistance at 1.2860 targets the 1.2930-45 area which if broken will retarget the March peak of 1.3125. A break below the 1.2790 zone would suggest a period of consolidation in a 1.2700-1.2900 range. For today, USDCAD support is at 1.2840 and 1.2810. Resistance is at 1.2880 and 1.2930
Today’s Range 1.2860-1.2930