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Brakes Applied To dollar Slide

Categories: AUD, CAD, CHF, EUR, GBP, Markets, MXN, News, USD

The US dollar has put the brakes on this weeks decline and has opened in New York with gains across the G10 spectrum.  Most of those gains were at the expense of the commodity currency bloc and the Japanese yen.

In Asia, Sterling failed to extend gains made after the British Prime Minister called a “snap” election.  Instead GBPUSD traded sideways inside a 1.2809-1.2859 band.

The sterling rally following the election announcement was a classic “short squeeze.”  Traders believe that the improved UK economy and the likelihood that the Conservative Party wins a large majority, will strengthen the UK’s Brexit negotiation.

NZDUSD moved higher in Asia, supported by the earlier report of a better than expected GlobalDairyTrade auction. That move didn’t last in Europe.  NZDUSD dropped from 0.7050 to 0.7011.

The Australian dollar suffered the same fate.  AUDUSD gains were erased in Europe on lingering disappointment from the RBA minutes and soft iron-ore prices.

USDJPY was bid from the Asia open and traded higher until New York started the day. USDJPY climbed from 108.39 to 108.95 on profit-taking and improved risk sentiment.

EURUSD held on to yesterday’s gains supported by better than expected Eurozone trade and inflation data that was as expected.

Oil prices inched higher in Europe after Opec Secretary General Mohammad Barkindo reaffirmed the cartels commitment to stabilizing the oil market and reducing global inventories.  WTI crawled up from $52.25/b to $52.50.

USDCAD has rallied strongly since April 13, rising from 1.3223 to 1.3435. That move was due to the drop in oil prices and negative Canadian dollar sentiment from repeated announcements of oilsands divestures by global energy companies.

USDCAD traders will keep a close eye on the EIA Weekly Crude stocks change report due at 10:30 am (EDT) as the currency pair is likely to continue to track oil price movements, especially since there isn’t any other economic data of note due today.

Yesterday, President Trump spoke to Wisconsin dairy farmers.  “We are also going to stand up for our dairy farmers in Wisconsin. And I’ve been reading about it, I’ve been talking about it for a long time, and that demands, really, immediately, fair trade, with all of our trading partners. And that includes Canada,” he said Tuesday, raising his voice to emphasize the country.

“Because in Canada, some very unfair things have happened to our dairy farmers and others.”

Canadian dairy farmers had a cow.

FX markets will take direction from bond and equity prices while keeping a close eye on geopolitical developments.


Overnight Ranges

19-Apr-17 High Low
USDCAD 1.3434 1.3435 1.3376
EURUSD 1.0721 1.0735 1.0709
USDJPY 108.95 108.95 108.39
GBPUSD 1.2832 1.2859 1.2809
USDCHF 0.9962 0.9981 0.9958
AUDUSD 0.7516 0.7561


NZDUSD 0.7014 0.7050 0.7011
USDMXN 18.6265 18.6450 18.5873
WTI   52.59 52.60 52.26
Close 4:00 pm EDT-Open 6:00 am EDT

USDCAD Technical outlook:

The intraday USDCAD technicals are bullish and targeting a break above resistance in the 1.3440-60 zone to extend gains to 1.3550.  However, the pace and magnitude of the rally warns of near term consolidation which will be triggered by price action below 1.3410 and confirmed by a move below 1.3370.  For today, USDCAD support is at 1.3410, 1.3380 and 1.3340.  Resistance is at 1.3440, 1.3460 and 1.3480.

Today’s Range 1.3360-1.3440

Chart: USDCAD 1 hour




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