President Trump ranted for two hours on Saturday, railing against Robert Mueller, Democrats, and Fed Chair Jerome Powell. He said that Powell was “someone who likes raising rates” and called him a “gentleman that likes a strong dollar.”
Those comments and news that China and US were inching closer and closer to a trade deal led to FX “risk-seeking” sentiment at the Asia open. It didn’t last.
The US dollar added to Friday’s gains against CAD, EUR and CHF at the New York open. GBP, JPY, AUD and NZD were slightly better than flat.
EURUSD erased its Asia gains and traded with a negative bias. Modestly better Eurozone Sentix Investor Confidence (Actual -2.2 vs forecast 3.1) and February PPI (Actual 0.4% vs forecast 0.3%) failed to offset pessimism ahead of Thursday’s ECB meeting when traders are expecting a dovish outcome.
GBPUSD is trading at the bottom of its 1.3201-1.3267 range. Weak Construction PMI (Actual 49.5 vs forecast 50.3) fading euphoria from last week’s belief that a “no-deal” Brexit will be avoided, undermined the currency pair.
USDJPY printed 112.00 in early Asia trading, then drifted lower into the New York open weighed down, in part, by selling of EURJPY. US Treasury yields have eased back a tick which didn’t help.
The Loonie is road kill. USDCAD soared after Canada Q4 GDP was far weaker than expected. Even worse, it was released about 20-25 minutes ahead of schedule, giving alert traders a jump on the news. By the time everyone knew the results, USDCAD was at a much higher level, which probably exacerbated the rally. Economists agree that this was an ugly report. However, they also expected a weak report due to the oil price plunge in November and December. Friday’s report ensured that Wednesday’s BoC policy statement would be a non-event.
There aren’t any notable Canadian on US economic reports today.
The intraday USDCAD are bullish following Friday’s rally above resistance in the 1.3250-1.3270 area. A break above 1.3340 targets 1.3660. The 1.3060-1.3360 range has been intact since January 7. USDCAD looked very bearish near the 1.3120 area and will look very bullish near the 1.3360 zone. Oil prices are still above $55.00/barrel and are above Friday’s low. A US/China trade deal will boost commodity currencies and should limit USDCAD gains. For today, USDCAD support is at 1.3270 and 1.3240. Resistance is at 1.3330, 1.3360 and 1.3390.
Today’s Range 1.3270-1.3340