Israel retaliated to yesterday’s missile attack from bases inside Syria, it was the largest in thirty years. Israel’s Defense Minister however stated that this was not an escalation to war but rather an end to recent tensions. Meanwhile oil prices touched $72 USD a barrel on West Texas, and subsequently dropped back on these comments. The longer that oil stays above $70 USD, the more analysts become owners of Canadian assets with the believe that the Canadian will get even stronger.
USDCAD 1.2770, 1.2756, 1.2740 1.2808, 1.2818, 1.2828
USD-CAD has traded softer over the last day after yesterday posting a seven-week high at 1.2997. The pair has settled in the lower 1.2800s. The new high extended a rebound from mid-April two-month low at 1.2527, but the surge in oil prices, up over 4% since President Trump’s announcement that the U.S. would be pulling out of the Iran nuclear deal, has returned some demand for the Canadian dollar given the benefit to Canada’s terms of trade. USD-CAD has resistance at 1.2905.
EUR-USD has recouped to the upper 1.1800s after yesterday posting a new 2018 nadir at 1.1822. It remains mostly a dollar strength story, with the euro trading mixed against other currencies today. EUR-USD’s December low at 1.1717 provides a target for trend followers, while trend resistance comes in at 1.1931-32. A breach and close above the latter would suggest the four-week downtrend has been exhausted.
EUR-CHF has settled in the low 1.1900s after breaking lower this week earlier in the week, leaving a three-week low at 1.1866. The move has been concomitant with EUR-USD’s fall to 2018 lows and the softening in expectations for the ECB to commence monetary policy de-stimulation. There is also a sense of completion with the cross having traded above the SNB’s prior floor at 1.2000 (which had been abandoned in January 2015 in the face of unstoppable euro weakness amid ECB quantitative easing) — “closing the gap” as technically minded market participants might put it. SNB’s Jordan reaffirmed his commitment to loose monetary policy at central bank’s annual general meeting in late April. He that inflation remains low and inflationary pressure is modest “despite out expansionary monetary policy” and that tightening monetary conditions “would be premature at this juncture.” Regarding the franc, Jordan said it remains “highly valued” and expressed a “continued willingness to intervene in the foreign exchange market as necessary.”