Oil is now at a three year high, President Trump sent out a tweet warning Russia to “get ready” for U.S. missiles, oil is now trading over $67.00 USD, WTI, a barrel, while Brent is trading at $72.50 USD a barrel. The Canadian dollar has responded favourably, having broken through its 90 day simple moving average of 1.2678. There is no Canadian economic data this week, so the currency will trade off US news.
Today the Fed will release the minutes of the last FOMC meeting, analysts will look for any changes in the Fed’s outlook to see if there are any new clues for potential rate hikes.
USDCAD 1.2567, 1.2554, 1.2525 1.2590, 1.2678, 1.2678
USD-CAD remained heavy after posting an eight-week low yesterday at 1.2588. A 5%-plus rebound in oil prices this week, and an associated revival in risk appetite in global markets have given the Canadian dollar, and other dollar bloc units, a boost. This helped offset disappointment from the news that an announcement on the NAFTA renegotiation will be delayed. The latest price action in USD-CAD affirms a downside trend that’s been developing over the last three weeks, from levels above 1.3100, and we expect more downside. Initial resistance is at 1.2634-36.
EUR-USD lifted to a new two-week peak at 1.2387. The price action so far this week fits talk of there being a sell-dollars-into-gains view following the big U.S. jobs report miss of last week. The U.S. data undercut the influence of the apparent slowing in Eurozone growth momentum. EUR-USD remains near the midway levels of a broad consolidation range that’s been seen for some two months now, which has followed a 14-month rally phase from sub-1.0500 levels. More of the same seems likely, with the odds for a big-picture breakout seeming low at the present time.
The dollar has posted modest losses versus its major counterparts, continuing a theme seen since last Friday’s U.S. jobs report miss, though the greenback managed moderate gains against the dollar bloc currencies, which fared less well as investor risk appetite flagged in the face of the geopolitical risks. USD-JPY drifted under 107.00 after peaking yesterday at 107.39, which left last week’s six-week high at 107.49 untested. Yen crosses also saw a similar price action, with the yen finding bids as the risk-on revival trade petered out. EUR-USD posted a two-week high at 1.2387. The Australian dollar came under some pressure after RBA Governor Lowe said that today that the board does not see a strong case for near-term move in interest rates. AUD-USD ebbed to an intraday low of 0.7740, correcting form yesterday’s near-three-week high at 0.7769.