December 2, 2019
USDCAD open 1.3282-86 (6:00 am EST) Overnight range 1.3274-1.3293
This morning, President Trump ate a dish of prunes with his All Bran Buds. Then he tweeted up a stink. First up, was an announcement of new steel and aluminium tariffs on imports from Brazil and Argentina. Then he harangued the Fed to “lower rates and loosen.”
President Trump doesn’t sound like he is in any hurry to ink a trade deal with China. He tweeted “US Markets are up as much as 21% since the announcement of Tariffs on 3/1/2018 – and the US is taking in massive amounts of money (and giving some to our farmers, who have been targeted by China)!”
The US dollar opened very close to where it ended November but came under pressure when New York opened which may have had more to do with latent month end portfolio rebalancing than Trump.
FX Market Snapshot
Change in currency value against the US dollar from NY close to NY open
Source: Saxo Bank/IFXA
Overnight, China retaliated for what it sees as the US meddling in its internal affairs. China said two US non-profit Democracy groups face (unknown) sanctions. They also suspended US naval ships and military aircraft “R and R” visits to Hong Kong.
China is reportedly demanding that a Phase 1 deal must include rolling back of all US tariffs. Just scrapping the planned December 15 tariff increase would not be enough.
FX markets ignored the news but not the Caixin Manufacturing PMI report for November, which rose 51.7. The results were unchanged from October, but better than the 5.4% that was forecast.
Better-than-expected New Zealand and Chinese economic data sparked demand for NZDUSD. Australia data was mixed, but AUDUSD managed to trade higher, as well, rising from 0.6763 to 0.6788, in early New York trading.
Trump’s early morning tweets underpinned the greenback, albeit only modestly. EURUSD ticked lower but just briefly and then it rallied from 1.1005 to 1.1025 when New York settled in. Several Eurozone Manufacturing PMI reports were a tad firmer than forecast, but the gains were not enough to lift them out of contraction territory. Eurozone PMI in November was 46.9 vs 46.6 in October. GBPUSD see-sawed in a 1.2898-1.2902 range with traders taking direction from election news and polls.
USDJPY dropped on the back of Trump’s tweets. The rising risk of a prolonged trade war and his comments about the Fed undermined the US 10-year Treasury yield, which dipped from 1.855% to 1.84%
USDCAD traded sideways in Asia and Europe and popped higher in early New York trading although the rally was uninspiring. USDCAD gains may be slowed by rebounding WTI oil prices which firmed on rumours that Saudi Arabia wants another production cut of 400,000 barrels/day.
Today’s US data includes ISM Manufacturing PMI (forecast 49). The Canadian calendar is empty.
USDCAD Technical View
The intraday USDCAD technicals are bullish above 1.3270, looking for a break above 1.3305 to retest resistance at 1.3350. A break above 1.3350 targets 1.3440 and then 1.3550. A break below 1.3270 will lead to a test of 1.3230. For today, USDCAD support is at 1.3270 and 1.3250. Resistance is at 1.3310 and 1.3350. Today’s Range 1.3270-1.3350
Chart: USDCAD daily
Source: Saxo Bank