• Financial Institutions
  • Corporations
  • Travelers
  • Foreign Bank Note Exchange
  • International Drafts
  • International Wire Transfers
  • Global EFT
  • Compensation De Chèques En Devises Étrangères
  • Traites Bancaires En Devises Étrangères
  • Travel
  • Technology Companies
  • Payroll
  • Healthcare
  • Nonprofit
  • Partnerships

US drops demand for US auto content. USDCAD breaking lower on NAFTA positive sentiment. US FOMC on next 2pmET, presser at 2:30pmET.

CXI March 21st, 2018


  • USDCAD: It was an eventful overnight session for USDCAD traders as the Globe & Mail published an article saying the US has dropped its demand that all vehicles made in Canadian and Mexico, for export to the US, must contain at least 50% US content.  This NAFTA-positive headline took immediate effect on markets in a quieter than normal Asian session (Japan on holiday), sending USDCAD swiftly lower.  Chart support at 1.3050-60 gave way, as did trend-line support in the 1.3030s.  Cross demand (from EURCAD and GBPCAD) came to the rescue in early European trade, but that fizzled out quickly when the 1.3050-60 level couldn’t be regained, and so USDCAD is trading back near its overnight lows as North American traders walk in.  Support this morning checks in at 1.2990-1.3005.  Resistance is 1.3040, then 1.3050-60.  The broader USD is mixed this morning (lower against EUR, GBP and JPY, but higher against AUD and NZD).  The big event today is the FOMC rate decision at 2pmET followed by Jerome Powell’s press conference at 2:30pmET.  Markets are expecting a 25bp rate hike, and so all eyes will be on Powell’s assessment of the economy and inflation, and the Fed’s “dot plots” (expectations for future rate hikes).  An upbeat tone will likely see a broad USD bid come in, while a cautious tone will likely see the USD go offered.  While it’s impossible to predict what the Powell’s commentary will be like today, we would be on the lookout for a USD positive outcome given strengthening chart technicals for the USD more broadly (against AUD, EUR, JPY, and CNH), given overextended USD short positioning vs. EUR (last week’s COT report), and given the chart on US 10yr yields (which looks poised to resume its rally higher).  A positive USD outcome would likely see USDCAD retrace its overnight losses, while a USD negative outcome would likely see USDCAD attack the low 1.29s where the next support levels lie.


Tune in @EBCTradeDesk for more real-time market coverage.


Market Analysis Charts

USD/CAD Daily Chart

USD/CAD Hourly Chart

EUR/CAD Daily Chart

GBP/CAD Daily Chart

Charts: TWS Workspace

About the Author

Erik Bregar

Erik Bregar - Director, FX Trading

linkedin twitter

Erik works with corporations and institutions to help them better navigate the currency markets. His desk provides fast, transparent, and low cost trade execution; up to the minute fundamental and technical market analysis; custom strategy development; and post-trade services -- all in an effort to add value to your firm’s bottom line. Erik has been trading currencies professionally and independently for more than 12 years. Prior to leading the trading desk at EBC, Erik was in charge of managing the foreign exchange risk for one of Canada’s largest independent broker-dealers.

Interested in creating a custom foreign exchange trading plan? Contact Us or call EBC's trading desk directly at 1-888-729-9716.

About Exchange Bank of Canada
Exchange Bank of Canada (EBC) is a Schedule 1 bank based in Toronto, Canada. EBC specializes in foreign exchange services and international payments providing a wide range of services to financial institutions and corporations, including banknote foreign currency exchange, travelers' cheques, foreign currency cheque clearing, foreign currency bank drafts, Global EFT and international wire transfers through the use of EBC's innovative EBCFX web-based FX software www.ebcfx.com.

Disclaimer: All product names, logos, and brands are property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, logos, and brands does not imply endorsement.

This publication has been prepared by Exchange Bank of Canada for informational and marketing purposes only. Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable, but no representation or warranty, express or implied, is made as to their accuracy or completeness and neither the information nor the forecast shall be taken as a representation for which Exchange Bank of Canada, its affiliates or any of their employees incur any responsibility. Neither Exchange Bank of Canada nor its affiliates accept any liability whatsoever for any loss arising from any use of this information. This publication is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any of the currencies referred to herein, nor shall this publication be construed as an opinion as to whether you should enter into any swap or trading strategy involving a swap or any other transaction. The general transaction, financial, educational and market information contained herein is not intended to be, and does not constitute, a recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading Commission Regulation 23.434 and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics and should not be viewed as a "call to action" or suggestion that you enter into a swap or trading strategy involving a swap or any other transaction. You should note that the manner in which you implement any of the strategies set out in this publication may expose you to significant risk and you should carefully consider your ability to bear such risks through consultation with your own independent financial, legal, accounting, tax and other professional advisors. All Exchange Bank of Canada products and services are subject to the terms of applicable agreements and local regulations. This publication and all information, opinions and conclusions contained in it are protected by copyright. This information may not be reproduced in whole or in part, or referred to in any manner whatsoever nor may the information, opinions and conclusions contained in it be referred to without the prior express written consent of Exchange Bank of Canada.