China came back from holiday, Japan was on holiday, and the Swiss franc went on a walk-about. In the early opening minutes of the Asia session, fat fingers, bad data entry or whatever, sent USDCHF soaring from 0.9998 to 1.0099 and back to 0.9990 within 15 minutes. That sets the stage for volatility from this week’s China/US trade talks, US inflation and Retail Sales data, Brexit and the rising risk for another US government shutdown on Friday.
The US dollar opened in New York with gains against the G-10 majors except for NZD and CAD both of which were unchanged from Fridays close.
USDJPY rose, and AUDUSD dipped as both currency pairs suffered from broad US dollar demand. A drop in commodity prices, the Swiss franc crash, and the Japanese holiday all contributed to the greenback’s gains.
GBPUSD traded sideways in Asian and then dropped from 1.2938 to 1.2896 when weaker than expected UK data highlighted the toll that Brexit was taking on the economy. Q4 GDP rose 1.3%, y/y and Manufacturing and Industrial Production reports were well-below forecasts. Prices rebounded to 1.2928 in early New York trading.
EURUSD continued to inch lower, dropping from 1.1329 to 1.1297 before climbing back to 1.1315 in New York. The single currency was undermined by the sharply higher “fix” rate for USDCNY. Prices may have derived some support from ECB Vice President Luis De Guindos comments predicting accelerating inflation.
WTI oil prices are languishing above the bottom of last week’s low ($51.80), trading at $52.24/b. Choppy range trading is likely to continue as long as the China/US trade talks persist. The US is poised to raise tariffs to 25% on March 1, for $200 billion of Chinese imports.
USDCAD is consolidating Friday’s gains after another stellar employment report drove the currency pair from 1.3310 to 1.3230. The 66,800 new jobs in January won’t be enough to make the Bank of Canada changed their dovish policy stance, just yet.
The Canadian and US economic release calendar is empty. Traders will be looking to Wall Street and trade headlines for direction.Outlook
The intraday USDCAD technicals are bearish while prices are below 1.3310, looking for a break of support at 1.3230 to extend losses to 1.3170. A break above 1.3310 targets resistance in the 1.3370-90 area which if broken would extend gains to 1.3550. For today, USDCAD support is at 1.3250 and 1.3220. Resistance is at 1.3290 and 1.3320.
Today’s Range 1.3240-1.3320