Oil prices have dropped slightly, markets are concerned on whether the U.S. will pull out of the Iran nuclear accord. If so, then oil production in the mid-east will drop significantly and oil prices will subsequently rise.
Canada’s Foreign Minister Freeland is staying in Washington for talks on updating NAFTA on hopes of a quick deal. This has been a recurring theme with the NAFTA talks, that a quick deal is on the horizon, it will still be some time.
30 day simple moving average 1.2800.
USDCAD 1.2845, 1.2838, 1.2828 1.2871, 1.2880, 1.2893
USD-CAD has remained buoyant, posting a three-week high of 1.2897 yesterday. The move extended a rebound from last Wednesday’s two-month low at 1.2527. A correction in oil prices, which have descended back under $68.0 in the WTI benchmark market after making a 40-month high at $69.56, along with a generally firmer bias in the U.S. dollar and associated rise in U.S. Treasury yields, have driven the rebound in USD-CAD. The Canadian dollar had already been coming off the boil in the wake of last Wednesday’s BoC policy meeting, as the statement indicated that the central bank would maintain its cautious stance on future policy changes, which remain data dependent. The latest price action in USD-CAD has negated the downside trend that had been in play over the prior three weeks, from levels near 1.3100.
EUR-USD was choppy ahead of the ECB policy announcement. The pair printed a new eight-week low at 1.2156, surpassing the Tokyo-session low by 3 pips, before flipping back to the 1.2170-80 area. Recent losses have been driven mostly by dollar outperformance, underpinned by the mix of looser U.S. fiscal policy and Fed tightening, but market participants will still be paying close attention to the ECB’s guidance today. Policy settings are widely expected to remain on hold, and we expect policy guidance to remain unchanged, keeping a phase-out of QE this year in play while refraining from making a commitment to a sustained adjustment amid persisting benign inflation. Such an outcome should maintain EUR-USD’s nascent downtrend. A key level to the downside is 1.2154, which marks the low point of the broadly sideways range that’s been play for nearly three months now. Resistance is at 1.2245.