Rumours make the world go round, at least the FX world. Traders are still recovering from yesterday’s rumour fueled volatility that roiled EUR, CAD and MXN markets.
Bejing officials said yesterday’s Bloomberg story about China reducing US Treasuries, saying the report may have cited wrong sources. They added that US Treasury investments are market driven. EURUSD consolidated in a 1.1930-68 range, well below yesterday’s 1.2018 head-line peak..
USDJPY recouped all of its losses from yesterday’s Bloomberg story, rising from 111.33 to 111.86 in Asia before drifting lower into the New York open.
The antipodean currencies were the only majors to open in New York with gains, today. AUDUSD rallied from 0.7839 to 0.7885 boost by a forecast-beating Retail Sales print. (Actual 1.2% vs. forecast 0.4$). NZDUSD followed Aussie higher, although the gains were less.
Sterling was steady in Asia but came under pressure in Europe. However, the 1.3470-1.3610 range since the beginning of the year remains intact.
Oil prices continued to trek onward and upwards. WTI recorded a price of $64.05/barrel, a level last seen in December 2014. Falling crude inventories, Opec production cuts and rising 2018 global growth forecasts have underpinned prices.
USDCAD soared yesterday afternoon after Reuters quoted “sources” saying Canada believes the US will pull out of NAFTA this month.. USDCAD rallied from 1.2480 at the time, to 1.2588. The Mexican peso also got hammered.
Later on, the White House said: “there has been no change in the President’s position on NAFTA.”
The NAFTA story also reduced the odds for a BoC rate hike next week.. USDCAD held on to the gains overnight
US PPI, Jobless Claims data and Canada New House Price index are due this morning. Traders will continue to dwell on the China-US Treasury story and NAFTA, while they wait for Friday’s US CPI and Retail Sales reports.
USDCAD Technical outlook:
The intraday UISDCAD technicals are bullish. The break of the downtrend line at 1.2450 and the rally above 1.2490 has shifted the focus to 1.2635, representing the 50% retracement of the 1.2355-1.2912 range seen since December 19. For today, USDCAD support is at 1.2590 and 1.2480. Resistance is at 1.2590 and 1.2640.
Today’s Range 1.2520-1.2620