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G20 Waters Down Free Trade

The G20 handed President Trump a minor victory and failed to include the usual pledge to keep global trade free and open.  Score “1” for the Donald.

Asia markets were not overly impressed with the omission and kept the US dollar on the defensive, a carry-forward action from last week. The fact that Japan was closed for Vernal Equinox Day probably exaggerated the impact although FX ranges were fairly narrow.

NZDUSD climbed steadily rising from a low of 0.7014 to peak at 0.7071 in early European trading.  Aussie followed Kiwi higher and both currency pairs declined slightly by the New York open.

The holiday in Japan left USDJPY adrift within a narrow 112.45-112.75 range and it opened, in New York, near the top

EURUSD continued to benefit from last week’s doveish Fed rate hike which managed to put a floor under the single currency at 1.0730 and led to resistance in the 1.0775 area being explored.  German Producer Price Index data showed a gain of 3.1% vs. forecast of 2.9% but it didn’t have much of an impact.  Members of a German Economic Panel have called for the ECB to phase out QE, which got a little more attention than usual following Mario Draghi’s musings on the subject at the last ECBV meeting.

Sterling stayed firm supported by last week’s Bank of England policy meeting where one member dissented and wanted a rate increase immediately.

 Sterling retreated from the overnight high of 1.2295. The Bank of England is expected to leave rates unchanged and deliver a neutral outlook.

Oil prices remain under pressure after the March “wash-out” of bullish long oil positions.  The downtrend in WTI following the break of support at $50.50/barrel is intact while prices are below $48.95 with a break of $47.10 suggesting further losses to $44.10. A move above $48.95 would target $50.50.

USDCAD is underperforming its antipodean cousins. Aussie and Kiwi managed gains overnight while the Canadian dollar gave up ground, undermined by soft oil prices and divergent Fed and Bank of Canada interest rate policy.

Traders will be hard pressed to find anything to get excited. Chicago Fed President Charles Evans speaks at lunch and President Trump just after dinner time tonight. A lack of key data suggests that for today, FX trading will be confined to existing ranges.

 

Overnight Ranges

Open  

20-Mar

High

Low

USDCAD 1.3352 1.3352 1.3305
EURUSD 1.0754 1.0776 1.0733
USDJPY 112.81 112.82 112.46
GBPUSD 1.2410 1.2434 1.2381
USDCHF 0.9984 0.9984 0.9958
AUDUSD 0.7721 0.7745 0.7692
NZDUSD 0.7034 0.7071 0.7014
USDMXN 19.1663 19.1788 19.0603
WTI   47.99 48.67 47.99
Close 4:00 pm EDT-Open 6:00 am EDT

 USDCAD Technical outlook:

The intraday USDCAD technicals are in a mild downtrend while prices are below 1.3380 which is also the top of the 1.3280-1.3380 trading band that has contained price action since the FOMC meeting, last Wednesday. A break either side of the range will extend moves by 0.0050 points.

Today’s Range 1.3280-1.3380

Chart: USDCAD 1 hour

usdcad-1-hourt-chart

 

 

 

 

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