USDCAD was ignored overnight and stayed relatively firm, despite the broad US dollar weakness. Mr Trump may have had a hand in keeping the currency pair bid. Last night he said ”We are going to charge countries outside of our country — countries that take advantage of the United States. Some of them are so-called allies, but they are not allies on trade. So we’re going to be doing very much a reciprocal tax, and you’ll be hearing about that during the week and the coming months.
Then he pointed his finger at Canada saying ”Canada does not treat us right regarding the farming and the crossing the borders,” Trump said. ”We cannot continue to be taken advantage of by other countries.”
The US dollar was kicked to the curb overnight, led by a plunge in USDJPY. The Canadian dollar watched the action from the sidelines.
USDJPY triggered a wave of stop-loss selling when support at 108.00 gave way and prices dropped to 107.42. There wasn’t a specific reason for the plunge although at the time, US equity futures were in the red and Treasury yields were lower. Later on, Japanese officials made noises about
USDJPY traded sideways in a 1098.52-108.92 range, supported by a rise in US Treasury yields. Volumes were low due a Japanese National holiday.
AUDUSD inched higher, supported by better than expected Business Conditions and confidence data. Kiwi went along for the ride.
In Europe, UK data was front and centre. Higher than expected January CPI (Actual 3.0% vs forecast 2.9%, y/y) and Core CPI (Actual 2.7% vs forecast 2.6%) sent Sterling soaring. GBPUSD rallied from 1.3840 to 1.3923 before easing back to 1.3905 in New York trading. Today’s data is additional fuel to justify a May rate hike.
EURUSD was bid in Asia and continued that way right into the New York open. Stop loss buying was noted on the break above 1.2275 and again at 1.2330..Traders appear to be less concerned about another bout of global equity selling and are focused on ECB policy normalization.
Oil prices have been unable to amount a meaningful rally since WTI dropped from $66.25 on Feb .1 to the Feb 9, spike low of $58.11/b.. Prices are at the overnight low and trading with a negative b ias, undermined by an International Energy Agency report. The IEA suggests that the increase in Global oil demand will be more than stopped up by a rise in US crude production.
Once again, the economic data cupboards in the US and Canada are bare. However, US dollar losses may be curtailed ahead of tomorrows Retail Sales and CPI data. FX traders are keeping an eye on US equity futures which are in the red (as of 7:00 am EST)
USDCAD Technical outlook:
The intraday USDCAD technicals are in a uptrend channel with support at 1.2565 and resistance at 1.2660. However, hourly resistance at 1.2630 has capped the tops ide for the past couple of days. If resistance from the 100 day moving average ( 1.2617) is overcome, it would target the 200 day moving average (1.2741) For today, USDCAD support is at 1.2560 and 1.2530. Resistance is at 1.2615, 1.2640 and 1.2680
Today’s Range 1.2560-1.2630