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USDCAD jittery amidst trade headlines. Market back near highs on massive EURCAD buying. Canadian GDP on deck at 8:30am.

CXI March 2nd, 2018


  • USDCAD: It was a volatile day yesterday for USDCAD.  At first we saw upward momentum fail just shy of the key 1.2870 resistance level despite stronger than expected US ISM figures.  Combine that with some less hawkish comments from the Fed’s Powell around the 10am hour and a rebound in EURUSD and traders had their reason to sell USDCAD back down to support in the 1.2820s.  Support held, and then Trump announced new steel tariffs (as expected) around mid-day.  The knee jerk reaction was for the market to bid up USDCAD again, this time past 1.2870, because it was negative news for Canadian trade on the surface.  However, when negative reactions from Canadian and European officials started hitting the wires about a hour later, the USD quickly reversed lower against EUR and CAD.  The move back lower in USDCAD saw traders attacking support at 1.2825 going into the NY close, and we had a confirmed failure of the 1.2870 level on the daily candlestick chart (all negatives for USDCAD going into overnight trade).  USDCAD, however, was resilient for most of the Asian and early European session, and it’s actually rebounding even further at this hour on massive EURCAD cross buying and Trump’s “trade wars are good tweet”.  It’s not clear what’s fundamentally driving the EURCAD surge at this hour, but we would note that the cross is technically “breaking out” on its chart and there’s not much resistance until the low 1.59s.  USDCAD has regained the 1.2870s as we finish typing and we now have the Canadian Dec GDP figures at 8:30amET.  Markets are expecting +3.4% YoY.  We think the 1.2870 level will be pivotal again over the next hour.  Should Canadian GDP disappoint, we would expect the market to build upon gains.  Should GDP surprise to the upside, we’ll likely see 1.2870 fail again and the 1.2820s attacked again on the downside.


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