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2018-04-06 08:15

Trump escalation of China trade tension + EURUSD selling keeps USDCAD bid ahead of big day. US & Canadian job reports at 8:30amET. Fed's Powell speaks at 2:30pmET.

Source: EBC Trading Desk

Summary

  • USDCAD: Dollar/CAD traders couldn’t get much going to the upside yesterday during the North American session.  The market saw some quick buying up to the 1.2800 level when EURUSD broke below 1.2250, but then the US Trade Balance figures came out worse than expected and knocked the USD lower broadly, and USDCAD back towards the 1.2770 support level.  Traders made another attempt to push higher about an hour later and then we got the positive NAFTA headlines out of Trudeau (“talks moving forward in significant way”).  This pushed USDCAD lower again and then finally the 1.2770 support level gave way.  This led to further selling into the NY close, but USDCAD was able to hold yesterday’s lows around 1.2750 despite a technically negative closing candle.  Early Asian trading got off to a colourful start with Trump ordering the US trade rep to consider another $100bln in tariffs on China.  This saw USDCAD spike higher 20pts, but the knee jerk reaction higher fizzled as the 1.2770s now capped instead of supporting.  Europe then came online and started pushing EURUSD lower once again, and this has allowed USDCAD to trade back above the 1.2770s, which improves the market’s technical outlook going into the US and Canadian employment reports out shortly.  The consensus for the US employment report is +185k jobs for March and +2.7% YoY and +0.3% MoM for Average Hourly Earnings.  The expectation for the Canadian number is +20k jobs for March and +3.4% YoY in Hourly Earnings.  Resistance in USDCAD is now 1.2825, then 1.2860-70.  Support is 1.2740-50 (light), 1.2720, then 1.2660.  And that’s not all folks.  The Fed’s Powell is going to be giving a speech at 2:30pmET at the Economic Club of Chicago (Title: Economic Outlook), so traders will be on the lookout for any headlines that hint at future monetary policy changes.  Canadian dollar futures traders added 1903 contracts in new positions yesterday.

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

 

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About the Author

Erik Bregar

Erik Bregar - Director, FX Trading

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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.

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Posted By Rachel Butler at 08:15 AM