USDCAD traded with a firm bias overnight and it just shattered resistance at 1.2915, opening the door for an eventual move to 1.3150. Mr. Trump’s tariff’s get a large part of the blame as they raise questions about Nafta. Specifically, will Nafta get revoked. The Bank of Canada policy meeting is on Wednesday. They are expected to leave rates on hold. Trump’s tariffs will stoke their “cautious” fires.
FX markets opened in New York, today, little changed from Friday. Traders are mulling over the possible impact on Euro from the news that German Chancellor Angela Merkel has finally secured a coalition and all the politicians can get back to running the country. The Italian elections concluded, and to no one’s surprise, there wasn’t a clear majority winner. Populist parties have made a good showing.
In Asia, Australia markets were closed for Labour Day. AUDUSD and NZDUSD were sold but recovered half of their losses in Europe. USDJPY traded sideways. Traders were concerned over US tariffs and Friday’s BoJ meeting which curbed their enthusiasm.
In Europe, US Services PMI rose 54.5, beating the forecast of 53.3, allowing GBPUSD to rebound from its Asia low of 1.3768 to 1.3833. EURUSD was offered at the open, but strong Eurozone Retail Sales and still firm Markit Services PMI readings underpinned the single currency.
Oil prices staged a “mini-bounce” in Europe, rising from $61.34/b to $61.94/b. Those gains disappeared after an International Energy Agency report that predicted that America would be oil self-sufficient by 2022 and that American Shale producers would be taking market share from Opec.
Global equity indices were mixed. Asian indices were down while Eurozone bourses were higher. Wall Street is poised to open flat.
The US dollar may garner some added support if today’s ISM services PMI data (forecast 59.0) beats expectations. There isn’t any data from Canada.
USDCAD Technical outlook:
USDCAD is the “Little currency that Could.” While not exactly a technical FX term, USDCAD has been climbing steadily since February 16 and the uptrend is intact. The intraday technicals are bullish above 1.2850, which guards another uptrend at 1.2770. A decisive break above the 1.2915-50 area will extend gains to 1.3150. For today, USDCAD support is at 1.2860 and 1.2820. Resistance is at 1.2915 and 1.2950.
Today’s Range 1.2880-1.2960