Yesterday’s comments by Trump that he wanted the NAFTA talks to come to some agreement within the next two weeks allowed the Canadian dollar to move higher. The CAD broke below the key level of 1.2850, and currently it’s below 1.2800. Although global equities are higher, some analysts are believing that this is a “dead cat bounce”, there is no life to the upswing. We will need a few more up days to remove the nervousness.
The Canadian will remain volatile in the short term with no clear direction, plan accordingly.
USDCAD 1.2788, 1.2775, 1.2772 1.2808, 1.2816, 1.2836
USD/CAD is between the devil and the deep blue sea. White House tweets on NAFTA went into a frenzy over the weekend. Once again, there were threats to pull out of the agreement. USD/CAD is expected to come under pressure; failure on the NAFTA front will kick in the impositions of tariffs on Canadian steel and aluminum. The pair is currently down 0.25%.
The Dollar is trading with a negative bias after the release of lower than expected Manufacturing ISM. The report card came at 59.3, a decrease of 1.5% points from the previous month’s reading of 60.8%. New Orders Index dropped 2.3% while the Employment component was lower by 2.4% points. We expect the Greenback to be on the defensive as markets digest the latest tweets from the White House and the fallout of Chinese tariffs.
The Cable is trading higher trying to recoup some of the losses from the previous sessions. GBP is currently up 0.45% against the US Dollar. But the underlying volume remains low, and this is where the danger lies. We expect this sugar rush to fade as investors turn their attention to incoming US data.
The EUR/USD pair is choppy and has cracked below the 1.23 handle. Overnight markets registered thin trading activity. Most European centers remained closed for Easter Monday. We expect the pair to consolidate within narrow ranges. Investors have been cautious not to breach the upper barrier and thus avoid attracting the wrath from ECB officials. These levels will be put to severe test. EU CPI and unemployment data are released mid-week. Better readings will get the market talking about ECB changing its monetary policy stance earlier than expected.