It is a National Day of Mourning for the US as former President George H. W Bush is laid to rest. US dollar bears and Wall Street bulls are also in mourning. They were absolutely crushed yesterday. The US dollar opened with gains across the board except against EURUSD which was unchanged and Sterling which rallied. The rally was fueled by fears that the weekend Trump/Jinping meeting only produced dirty dishes and not a trade plan. China may have attempted to alleviate those fears. Earlier today, the Ministry of Commerce said that Beijing agreed to a 90-day trade war truce. FX traders have yet to take the bait.
EURUSD dropped from 1.1417 yesterday to 1.1318 overnight. The move was driven by yesterday’s Wall Street meltdown and renewed fears that the China/US trade talks were just noise. EURUSD got a bit of support from Markit PMI data and a rebound in Retail Sales data.
GBPUSD went for a joy-ride. Prices sank to 1.2674 on weaker than expected November Services PMI data (Actual 50.4 vs forecast 52.5) and Theresa May’s loss of three votes in Parliament. Prices rebounded to 1.2763 as traders concluded the parliament votes lowered the risk of a no-deal Brexit.
USDJPY popped from yesterday’s low of 112.58 to 113.10. Prices firmed after somewhat dovish comments from Bank of Japan Deputy Governor Wakatabe despite weak US Treasury yields.
AUDUSD dropped after failing to break above resistance at 0.7390 yesterday, nicely filling the Friday close/Monday open gap, in the process.
USDCAD bottomed out at 1.1364 just before New York opened yesterday and has traded steadily higher ever since, reaching 1.3293 in Europe. US dollar strength, low oil prices and concern about a dovish Bank of Canada policy statement today, fueled the rally. The risk today for USDCAD is of the Bank of Canada policy meeting statement is on the dovish side. Economists point to the dip in September GDP and the plunge in oil prices since October as reasons for Mr Poloz to err on the side of caution. If so, USDCAD price action could be whippy due to the US partial closure. Wall Street is closed as is the Federal Government. There are no economic reports from Canada or the US.
The USDCAD technicals are bullish while prices are above 1.3160 looking for a break of resistance at 1.3290 to extend gains to 1.3330 and then 1.3390. The rally nicely filled the “gap” from Friday’s close to Monday’s open. A break of 1.3390 would target 1.3550 while a move below 1.3240 suggests additional 1.3150-1.3300 consolidation. For today, USDCAD support is at 1.3240 and 1.3210. Resistance is at 1.3290 and 1.3340. Today’s Range 1.3210-1.3310.