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NAFTA Waffling whips around USDCAD as Trump makes tax announcement

Posted on: April 27, 2017

Headline trading in full force over the past 24 hours, as USDCAD remained at the mercy of the Trump Administrations policies. Yesterday the White House presented its vision for tax reform, including three simplified tax-brackets and moving to a territorial system for foreign income. After flirting with 1.3600 CAD began to rally when there was no talk of a border adjusted tax. Just when it looked like we would break support around 1.3550, a headline printed suggesting Trump was planning to immediately withdraw from NAFTA, quickly sending USDCAD through 1.3600 and USDMXN through 19. This information is not new, but seemed like participants were looking for a reason to buy the USD.

Overnight, US officials walked back the headline, instead stating Trump would begin renegotiations with Canada and Mexico which caused CAD to rally 100 pips before fading a bit as WTI broke below $49. The Bank of Japan left policy unchanged but lowered its inflation forecast. Despite lots of data out of the United States this morning, today the big event is across the pond with the ECB rate decision and Draghi on the tapes as I am writing this. Statements such as ‘risks moving closer to being broadly balanced’ and ‘recovery increasingly solid’ had the EUR about 30 pips higher before statements regarding inflation concerns caused a reversal.

For those watching USDCAD, clearly participants got a little trigger happy on the NAFTA headline yesterday. While the close above 1.3600 is bullish and could open up an extension to 1.3839, the quick sell-off after the correction should provide some caution. If you are a USD bull with dollars to sell, you should take comfort in the fact that the technical breakdown in WTI is not conducive to commodity currency strength. GDP numbers tomorrow are certainly something to be aware of, with estimates of 0.1% for February in Canada while in the US its 1% for Q1. If you need to buy dollars you can try and buy on dips but a poor GDP reading in Canada combined with a strong print in the US could see a quick run towards 1.37.

  • Yesterday’s NA Range 1.3543 – 1.3623
  • Asia Overnight Range 1.3530– 1.3648
  • London Overnight Range 1.3550 – 1.3600

April 27, 2017

NAFTA Waffling whips around USDCAD as Trump makes tax announcement

Headline trading in full force over the past 24 hours, as USDCAD remained at the mercy of the Trump Administrations policies.

April 25, 2017

Trump administration talks tough on trade, hammering the loonie

It is clear that the phrase “no use crying over spilled milk” has not made it south of the border.

April 24, 2017

Macron and Le Pen move on in French election

Lively weekend in currency news, with the first round of the French election happening yesterday.

April 20, 2017

Macron increases lead on Le Pen in French polls

Yesterday USDCAD kept chugging along, ending the New York session around 1.3485.

April 19, 2017

May takes GBP on wild ride as she announces snap election

Did anyone catch the number of the GBP train yesterday? After announcing a surprise press conference yesterday, Theresa May caught the market off guard by announcing she would not be resigning as PM.

April 03, 2017

USDCAD remains range bound ahead of employment numbers

The USD is mixed against crosses to start the week this morning, gaining ground against AUD/NZD.

March 31, 2017

CAD strengthens as Canadian GDP comes in higher than expected

It looked like USDCAD might finally take a run at the post FOMC low of 1.3265 for a while yesterday.

March 29, 2017

USD bulls run again?

USD has been on its back foot since the beginning of March but it regained its footing yesterday.

March 28, 2017

Oil prices stabilize…for now

After seeing some interesting moves overnight yesterday, price action fizzled into the North America session. USDCAD tested support again at 1.3320 before taking another run at resistance as oil prices sold off to start the North American session.

March 24, 2017

Canadian CPI slows in February

Yesterday the theme was anticipation, as the market sat around on pins and needles and waited for Congress to vote on the Trumpcare bill.

March 23, 2017

Trumpcare vote takes centre stage

Yesterday the markets were in risk-off mode, with concerns about the ability of Republican leaders to successfully push the ACHA health care bill through the House.

March 22, 2017

Is the USD uptrend ending?

Canadian retail sales surprised to the upside coming in at 2.2% for January vs expectation of 1.5%.

March 21, 2017

Canadian retail sales stronger than expected

After a while you run out of descriptions for watching grass grow, so we will not spend much time recapping what happened (spoiler alert: not much) yesterday.

March 20, 2017

G20 proves uneventful, UK announces Brexit intentions

Another sleepy start to the trading week so far as participants return to the desks from the weekend without much to report.

March 14, 2017

Slick oil prices send Canadian dollar slip sliding away

The week in currency markets started out with an uneventful session yesterday, as participants watched tight ranges play out in thrilling fashion.

March 13, 2017

Event risk headlines upcoming week

The calm before the storm certainly would be a good description of the currency markets this morning.

March 09, 2017

ECB leaves rates unchanged

After starting the week slow, USDCAD embarked on a steady grind higher yesterday.

March 07, 2017

Lack of momentum causes quiet start to week

Tight ranges were the theme yesterday, with USDCAD content to wander around in a 40-point range for most of the North American session.

March 06, 2017

Political risk in France continues to hamstring Euro

Last week ended with a lineup of Federal Reserve speakers, the last communications ahead of the blackout period before the March rate decision next week.

March 06, 2017

Financial Markets weekly newsletter

Unemployment is low, inflation ticking up, and confidence high in the US. Here in Canada, well let’s just admit it, we are deeper and more nuanced.

March 03, 2017

USD strength takes a pause ahead of onslaught of Fed speak

If you were looking for an overused cliché to describe the events of yesterday but can’t quite put your finger on a good one, may I suggest “The trend is your friend”?

March 02, 2017

Bank of Canada keeps dovish tone

US dollar continues to surge with March rate hike back on the table.

March 01, 2017

US Fed hawks circle around a March rate hike

On a day where the focus was supposed to be on Trump’s State of the Union address to Congress, the US Fed stole the show.

February 28, 2017

Markets await Trump’s speech to congress

We kick started the week in currency markets with a groggy yawn on Monday, as participants were reluctant to have big positions ahead of risk events later this week.

February 27, 2017

Currency markets take a breather ahead of busy week

Friday brought us the most action we have seen in USDCAD in a number of sessions, as a strong headline inflation number saw CAD strengthen against the USD.

February 23, 2017

USD slides continues after dovish Fed’s minutes

Fed minutes were slightly dovish with no hints of a March hike yesterday.

February 22, 2017

Canadian retail sales underwhelm

For those watching USDCAD who managed to stay awake through yesterday’s session.

February 21, 2017

USD well bid as market ponders March rate hike

Hopefully everyone enjoyed the long weekend.

February 17, 2017

Messy politics in France continue to hamstring Euro

After briefly breaking below 1.3020 in USDCAD on Thursday morning, USDCAD found strong buyers as the support band ahead of the figure held strong.

February 16, 2017

March rate hike on the horizon?

After strong retail sales and CPI prints yesterday, you may be surprised to learn we walked in this morning almost 100 points lower in USDCAD from the highs of yesterday.

February 15, 2017

Strong North American data sees USD and CAD strengthen

Testimony from Janet Yellen turned out to be anything but uneventful yesterday. She stressed that the Fed does not need to wait until fiscal policy kicks in to hike rates, and that a March rate hike has not been ruled out.

February 14, 2017

USD weakens as Trump security advisor resigns

The week kicked off with a quiet session yesterday, as a lack of data meant participants were once again focusing on the headlines.

February 13, 2017

Currency markets quiet ahead of Trump/Trudeau summit

Over the weekend President Trump hosted Prime Minister Abe from Japan and today he meets with Prime Minister Trudeau.

February 10, 2017

Canadian job numbers strong, hourly earnings disappoint

Yesterday looked to be a fairly uneventful session, with USDCAD grinding lower.

February 10, 2017

Financial Markets weekly newsletter

Literally the only story in town this week has been the newly released employment report.

February 09, 2017

USD weakens as crude hangs in

This week seems to be moving at a pace just slightly faster than Trump’s cabinet confirmations.

February 08, 2017

Market consolidates on lack of conviction

The markets are jumping this way and that without any real conviction.

February 07, 2017

USD bulls return to the bandwagon

Yesterday proved to be fairly uneventful, with risk-off sentiment permeating the market.

February 06, 2017

USD gains strength to start the week

A slow start to the week, with participants nursing their Super Bowl hangovers.

February 03, 2017

US employment report produces mixed bag of results

This morning US employment numbers are the big story, with Nonfarm Payrolls gaining 227k compared to expectations of 180k.

February 03, 2017

Financial Markets weekly newsletter

Another quiet week on the rates front. Gov. Poloz spent some time in Canada’s greatest province to address the business school at the University of Alberta.

February 02, 2017

Central banks stand pat

Yesterday it was the US Fed’s turn in the Central Bank shuffle, and they managed to underwhelm the market.

February 01, 2017

Fed day

All eyes focus on the FOMC rate decision today at noon.

January 31, 2017

Canadian GDP stronger than expected

The week started off fairly uneventful yesterday, as participants jockeyed for position ahead of the big three Central Bank announcements that began with the Bank of Japan.

January 30, 2017

Central Bank decisions headline busy week in currency markets

Friday represented a slow grind higher in USDCAD, as the market seemed determined to end the week above the 100 week moving average that now sits right around 1.3100.

January 26, 2017

USD buying returns overnight as US yields break higher

The Canadian dollar enjoyed gains yesterday, as broad USD weakness remained.

January 25, 2017

CAD appreciates as Trump continues parade of executive orders

The Canadian dollar enjoyed gains yesterday, as broad USD weakness was compounded by Trump signing an executive order to approve the Keystone XL Pipeline.

January 24, 2017

British Supreme Court rules parliament must approve trigger of Article 50

USD selling was the name of the game yesterday, as Steve Mnuchin’s comments about a stronger dollar being a headwind to a stronger US economy ignited selling.

January 23, 2017

A new era begins

Friday was the big day, as Donald Trump was officially inaugurated as the 45th President of the United States.

January 20, 2017

Financial Markets weekly newsletter

Context is everything isn’t it? Gov. Poloz did indeed say that an interest rate cut “remains on the table” at the press conference following the MPR this week.

January 20, 2017

Inauguration day

Donald Trump becomes the 45th President of the United State today.

January 19, 2017

ECB leaves rates unchanged

Central Banks continue to be the flavour of the week, with the Bank of Canada leaving rates unchanged as expected yesterday.

January 18, 2017

Bank of Canada kept rate unchanged

USD sold off against most currency yesterday with Trump saying USD is too strong in an interview.

January 17, 2017

USD weaker across the board as Trump suggest USD too strong

After a quiet North American session yesterday due to MLK Day in the United States, the overnight session certainly brought more action.

January 12, 2017

Trump presser underwhelms causing USD to sell off

Yesterday The Donald staged his first press conference in months, with many hoping he would lose the theatrics and focus on fiscal policy specifics as well as other policies under his regime such as repealing Obamacare.

January 11, 2017

All eyes on Trump’s first press conference since July

Fasten your seatbelts, everyone, as today is the first press conference for The Donald as President Elect.

January 10, 2017

GBP trades fresh lows against USD

A fairly quiet session to kick off the week yesterday, as broad USD weakness remained the key theme on Monday.

January 09, 2017

GBP weakens as politicians continue to insist on hard Brexit

Friday was certainly an interesting session, with Canadian employment numbers surprising the market to the upside.

January 05, 2017

USD weakens as Fed minutes offer little of interest

Just like the Bruce Springsteen song, USDCAD was Born to Run stops yesterday.

January 04, 2017

Canadian dollar outperforms overnight

Despite a nosedive in WTI yesterday, CAD managed to hold its ground as the New York USDCAD close printed at 1.3427.

January 03, 2017

Markets start 2017 with a slow crawl

2017 has started a little slow, with Japan and New Zealand closed overnight liquidity was quite thin again.

December 30, 2016

Financial Markets weekly newsletter

George Santayana is credited with saying, “Those who do not learn history are doomed to repeat it.”

December 23, 2016

CAD weakens heading into Christmas weekend

For those of you that have the misfortune of being in the office today, I have decided to further punish you by issuing an FX commentary.

December 22, 2016

Financial Markets weekly newsletter

It's been a quiet week for data and volatility, with yields in a fairly tight range.

December 21, 2016

Riksbank extends QE, leaves rates unchanged

Why are we leading with the news that the Swedish Central Bank, the Riksbank, extended their QE and left rates unchanged? Because that is about the most exciting thing that happened overnight.

December 20, 2016

Markets consolidating ahead of holidays.

Not much to talk about as most currencies are trading close to yesterday’s close with the exception of the yen.

December 19, 2016

USD strength remains the name of the game

The trend was your friend on Friday, with USD buying continuing to be the dominant trade.

December 16, 2016

Financial Markets weekly newsletter

The BOC released its Financial System Review this week. It highlighted the “elevated” risks of “national household financial stress, combined with house price correction."

December 15, 2016

Fed surprised market with hawkish dots

The Fed finally delivers with a 25bp that was expected universally.

December 13, 2016

All eyes waiting on the last fed meeting of the year

All markets are trading range bound as traders wait for the FOMC decision tomorrow.

December 09, 2016

CAD continues to gain strength as market turns focus to the Fed

Yesterday saw USDCAD chop around in a 50-pt range for most of the session, eventually breaking below 1.3200.

December 08, 2016

ECB announces asset purchases through end of 2017

Yesterday saw CAD dollar strengthen against the US, as a fairly uneventful decision by the Bank of Canada had the market take the path of least resistance and send USDCAD lower.

December 07, 2016

CAD takes a breath as market focuses on BoC language

Yesterday saw USDCAD test higher early, hitting 1.3311 before fading to close the session near where it started.

December 06, 2016

CAD chops around as WTI retraces

Yesterday saw CAD strengthen again, setting a new recent low of 1.3236 as oil enjoyed gains early in the session.

December 05, 2016

EUR whips around as Italians vote no

Last week ended with employment numbers in the US and Canada.

November 30, 2016

CAD blows in the wind as market waits on OPEC

Yesterday was the calm before the storm in USDCAD, with participants content to trade in a range ahead of the OPEC announcement this morning.

November 29, 2016

OPEC doubts grow as USD regains some strength

Yesterday we saw general USD weakness in the market, as USDJPY broke through 112.

November 25, 2016

Markets crawl as the US celebrates Thanksgiving

With the US celebrating Thanksgiving yesterday, the markets that were open were confined to very tight ranges.

November 23, 2016

USD strengthens on strong durable goods orders

After spending most of the overnight session in a 30 point range, USDCAD is testing higher this morning.

November 22, 2016

USD weakness continues as risk-on sentiment grows

USDCAD continues to test lower, breaking through 1.3400 again overnight as markets get more accustomed to a potential production cut from OPEC.

November 21, 2016

CAD strengthens as oil prices enjoy gains heading into OPEC meeting

CAD has started the week off on a positive note.

November 17, 2016

CAD follows crude as oil headlines push around commodity currencies

CAD was dragged around by Crude yesterday, as a bearish EIA inventory report caused initial USD strength and CAD weakness was quickly forgotten about.

November 16, 2016

CAD strengthens as crude enjoys strong gains

After experiencing a bit of trend exhaustion, CAD strengthened against the USD.

November 15, 2016

USD consolidates as participants take profit

After taking another run at 1.3600 early Monday morning, CAD slowly strengthened.

November 10, 2016

Dust settles as markets envision Trump presidency

In quite the reversal from overnight lows, equity markets, crude and most other risky assets managed to rebound.

November 09, 2016

Markets tumble as Trump is elected President of the US

Wow. If you were complaining about a lack of volatility in the markets, be careful what you wish for!

November 08, 2016

Markets open cautiously higher as Clinton shows slight lead in polls

Well the big day for our friends south of the border is finally here.

November 07, 2016

Currency markets focus shifts to US election

A reasonably quiet end to the week on Friday, as USDCAD was content to churn in a 30-point range for most of the day. The exception was a misguided OPEC headline stating that Saudi Arabia was going to raise production significantly, causing WTI to tumble

October 31, 2016

CAD opens stronger ahead of a busy week of economic data

USDCAD tested higher for most of the session on Friday, breaking through resistance at 1.3400 a couple of times.

October 28, 2016

USD Oscillates around 1.3400 as Q3 GDP Beats Expectations

USDCAD tested higher for most of the session yesterday, briefly running stops above 1.3400 before closing back under as US FI yields continue to increase.

October 24, 2016

CAD weakens overnight as oil sells off

After the flurry of Central Bank activity last week, the market takes a breather this week.

October 21, 2016

CAD Weakens after poor retail sales numbers

Quite the price action in EURUSD yesterday, after the ECB decision came out.

October 19, 2016

CAD strengthens ahead of BOC rate decision

CAD has strengthened overnight, as oil continues to creep higher.

September 12, 2016

Fed Governor Brainard in the spotlight

The Canadian dollar remains on the weak side.

September 06, 2016

Weak ISM number has USD long on the run

Market getting back into things after Labor Day long weekend.

August 29, 2016

Jackson Hole over, now for Non-Farm Payroll

Janet Yellen signalled a hawkish stance on Friday.

August 23, 2016

Markets wait for Jackson Hole

Volatility continues to be at its low as markets wait on the sideline.

August 15, 2016

Markets slow down with summer trading kicking in

Summer trading has kicked in as most currencies are trading close to Friday’s close.

June 28, 2016

Markets stabilizing after Brexit...for now

Yesterday, post-Brexit risk off sentiment is still lingering as capital runs to safe haven assets.

June 23, 2016

Currency: Brexit Day

The day that everybody is waiting for is finally here. The Brits are hitting the polls today to determine if the UK is going to stay in the EU.

June 20, 2016

Brexit off, risk on

Risk rallies after the latest UK referendum polls on the weekend show “remain” camp in the lead after “leave” camp in the lead last week.

June 13, 2016

Brexit and soft Chinese data sour risk sentiment

Risk-off this morning with three more EU Referendum polls released over the weekend, one showing a 10pt lead for the leave camp with mixed results for the other two.

June 01, 2016

Beige book and ECB put markets on hold

Yesterday, we saw nervous traders selling oil ahead of the OPEC meeting tomorrow.

May 30, 2016

Dual holiday keeping market quiet

As expected, the week is starting off quietly with both the US and UK off for holiday.

May 25, 2016

Bank of Canada stays steady on its course

The focus of the day is the Bank of Canada announcement and it was widely expected to remain unchanged at 0.5%.

May 11, 2016

USDCAD remains on the sideline

Oil price took a tumble yesterday as WTI fell from an overnight high of 45.94 in Asia to the low 44 range at the open.

May 09, 2016

Disappointing NFP not denting the USD rally

The RBA slashed inflation forecasts overnight while leaving GDP and unemployment projections unchanged.

May 02, 2016

Markets sit idle with several holidays

The market is off to a quiet start with UK and China both closed for holidays.

April 25, 2016

Currency: Monday, April 25

The week is starting off slowly as the market is in waiting mode for a couple of important central bank decisions this week.

April 21, 2016

Currency: Thursday, April 21

It’s a day of central bank decisions today. The Riksbank kept policy rates unchanged at -0.5% and extended QE by 45bn.

April 05, 2016

CAD weakens to 1.3220

Yesterday I felt some astonishment that CAD had managed to remain resilient in the face of weakening crude prices and hawkish comments from Fed Dove Rosengren.

March 31, 2016

CAD rallies to 1.2860

It’s been quite the week and we still have US non-farms jobs data to contend with tomorrow.

March 30, 2016

CAD rallies to 1.2915

Well, it’s been a somewhat baffling few weeks as a central bank watcher.

March 21, 2016

CAD consolidating in mid 1.3000s

I must confess CAD has given me some angst and heartburn of late.

March 16, 2016

CAD range trading around 1.3360 as market awaits FOMC rate announcement

Somewhat predictably, market participants have spent the last two days paring USD shorts.

March 14, 2016

CAD maintains last week’s gains despite crude rally stalling

Well, I am back after a week away and see CAD has continued to grind into the lower end of what I see the medium term range will be for the next few months.

March 09, 2016

Currency: Wednesday, March 9

WTI fell $2.30/bbl yesterday amid weak Chinese trade data sparking concern again over the world’s economy.

March 08, 2016

Currency: Tuesday, March 8

Yesterday, the bulls took over as risk sentiment continued its joyous mood in the past week. Iron ore prices had the biggest one-day rise on record and Brent crude traded over $40/bbl. CAD got supported in the risk-on environment.

March 04, 2016

CAD rally extends to 1.3335 as commodity prices firm

CAD has been able to maintain its gains this week, twice rejecting a move above 1.3490, each time recovering back to 1.3415/20 where it was this morning when us jobs data came out.

March 01, 2016

CAD stages strong rally

It’s been an eventual session as the market has caught somewhat wrong footed by the extent of the CAD rally. This morning Stats Can released December and Q4 GDP data.

February 26, 2016

Currency: Friday, February 26

Well, this week has taught me not to make bold statements about market direction when coming back from vacation.

February 24, 2016

Currency: Wednesday, February 24

Well, took a few days off and see CAD continues to range trade, reacting to various crude headlines.

February 22, 2016

Currency: Monday, February 22

Brexit, the topic that everybody is talking about over the weekend. UK has set a date to vote on whether to stay...


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