Markets are taking a more positive tone, U.S. equities are doing better on expectations that trade wars escalations are becoming muted. Treasury Secretary Steven Mnuchin told Fox News that he’s “cautiously hopeful” that China will reach a deal to avoid tariffs on $50 billion of U.S. exports, while European leaders demanded a permanent exclusion at the threat of retaliation and a deal was struck with South Korea.
The Canadian dollar remains in a narrow range, Thursday Monthly GDP numbers will likely move the currency, but not that much.
USDCAD 1.2867, 1.2855, 1.2845 1.2895, 1.2905,1.2929
USD-CAD drifted about 30 pips low in making a low at 1.2848. Last week’s two-week low at 1.2824 has remained unchallenged. News of progress on the NAFTA front, with the U.S. last week dropping its contentious auto-content proposal, has given the Loonie a footing. Former consolidation support at 1.3045-47 has now reverted as a resistance level. A $5-odd rebound in oil prices over the last week has also been a positive lead for the Canadian buck.
EUR-USD rallied to an 18-day high of 1.2416 on the back of a broader drift lower in the dollar. Recovering risk appetite after U.S. Treasury Sectary Mnuchin said there has been “productive ” talks with China helped allay fears of trade wars, and indirectly led to a downward drift in the dollar as demand for risk assets revitalizes. Last week’s Fed rate hike was well anticipated, while its guidance was a tad less hawkish than most expected. The countdown to when the ECB will commit to ending its QE program continues, meanwhile. In the bigger view, EUR-USD has settled near the midway levels of a consolidation range that’s been seen for nearly two months now, which follows a 14-month rally phase from sub-1.0500 levels. We anticipate more of the same for now. Support comes in at 1.2324-25, and 1.2400.