Trump has announced that he is behind the current legislation that is being perused by Congress which will strengthen the Committee on Foreign Investment in the U,S. This will prevent companies from abusing the intellectual-property rights of American companies. The key to this legislation is that no one country is identified, thereby easing tensions with China. Trump could have used a more hard line approach, but he will follow this course for the moment.
The USDCAD is basically unchanged even with the jump in oil prices, up 2.7%, it seems that economic data is not governing the markets but rather the rhetoric from Washington, this makes trading more difficult, as assessing what may or may not change currency rates if totally negated by Washington.
USDCAD 1.3280, 1.3268, 1.3260 1.3302, 1.3308, 1.3318
USD-CAD has remined buoyant this week, rising back above 1.3300 over the last day. Market participants are still digesting last Friday’s release of underwhelming retail sales and cooler than anticipated inflation data out of Canada. BoC Governor Poloz is scheduled to speak today, which will be the final policymaker outing ahead of the July 11 rate announcement. We are expecting a 25bp hike, though with a weakened conviction following weaker data and given the uncertainty over NAFTA. Overall, we retain a bullish view of USD-CAD, although the surge in oil prices over the last two days has taken a little vim out of this view. Support comes in at 1.3280.
EUR-USD has settled around the 1.1650 mark after descending from a two-week high of 1.1721, which seen on Monday. A rebound in global stock markets yesterday aided the dollar’s recovery, which had previously taken a hit as trade tensions rose, though equity markets have since come back under some pressure. EUR-USD remains in broadly consolidative phase after a downtrend from mid-April levels above 1.2400. The range over this phase has been 1.1508 to 1.1851. Trade tensions have been overriding normal fundamental leads. The view on the street is that a scenario of a deepening and prolonging trade way would be bullish for EUR-USD, given the vulnerability posed to the dollar by the U.S. twin deficits during any sustained episode of risk-off-driven capital flight. Any sign of a negotiated resolution would conversely be bearish for EUR-USD. For now, we see that the balance of directional risk is skewed to the upside. Support comes in at 1.1649-50, and resistance at 1.1628-34.