Canadians are returning to work from what was for many, a very soggy Victoria Day long weekend.
EURUSD spiked higher on Monday after German chancellor Angela Merkel told some students in Berlin that a “too weak” euro was behind Germany’s large trade surplus. FX traders only heard “too weak Euro” and the single currency spiked to 1.1262 from 1.1164.
Some European bank analysts suggested that the comment was taken out of context. The market doesn’t appear to be buying into that theory, as EURUSD is hovering near the peak.
On Tuesday, Eurozone Manufacturing PMI (May Actual 57.0 vs. forecast 56.5) and the German IFO survey were above consensus and provided additional support to EURUSD.
Sterling was rocked by a terrorist attack in Manchester on Monday night which undercut GBPUSD. Sterling was already under (slight) pressure after peaking at 1.3034 on Monday due to the Conservative party dropping in the polls. In addition, there was more bickering on the what the EU will charge the UK to leave the EU.
USDJPY traded sideways inside a 110.86-111.55 range due to bearish short term technicals and the on-going White House drama.
WTI Oil prices peaked on Monday on news that many Opec nations have agreed to the Russia Saudi plan to extend production cuts for nine months. WTI declined to $50.60/b on Tuesday, in part BECAUSE Iran has not agreed to the terms.
USDCAD traded with a negative bias in a narrow 1.3472-1.3534 range, benefitting from the oil price rally.
There is US data today in the form of Markit Manufacturing PMI, New Home Sales, and Richmond Fed Manufacturing Index, none of which will have much of an impact on FX markets. Traders will be content to wait until Wednesday to see what, if anything, the FOMC minutes from May 3 have to offer.
|Open||Includes Mondays Range|
|23-May-17||Open-6 am EDT||High||Low|
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish while trading below 1.3510 looking for a break of 1.3440 to extend losses to 1.3410. A move above 1.3510 suggests another test of 1.3580. For today, USDCAD support is at 1.3440 and 1.3410. Resistance is at 1.3510, 1.3540 and 1.3580
Today’s Range 1.3410-1.3490
Chart: USDCAD daily
Source: Saxo Bank
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