NY Open: A nervous calm in global FX

Forex

Michael O’Neill

FX Trader, Loonieviews.net

FX traders were a tad skittish at the New York open. The US dollar was bid, albeit mildly, commodity prices were soft and global equity indices were in the red. Traders were nervous as there wasn’t any US economic data due today to provide a distraction from President Trump’s geopolitical mess.

USDTRY is still at elevated levels, but for this morning, the negative sentiment has dissipated. 

Wall Street is in positive territory, and the US dollar has retreated across the board from its opening levels. EURUSD popped to 1.1430 from 1.1377, in part because of lack of follow through selling overnight and because of no further Trump tweets on Turkey. EURUSD may be overdue for a correction, but gains may be limited due to Turkey and contagion fears combined with the well-entrenched downtrend.  

GBPUSD rallied from 1.2749 at the New York open to 1.2784 but needs a decisive break above 1.2790 to extend gains to 1.2830.

USDCAD soared in Asia after President Trump tweeted “Deal with Mexico is coming along nicely. Autoworkers and farmers must be taken care of, or there will be no deal. New President of Mexico has been an absolute gentleman. Canada must wait. Their Tariffs and Trade Barriers are far too high. Will tax cars if we can’t make a deal.”

Trump’s tweet raises concerns that the US may be gravitating toward a bilateral Mexico/US trade pact or else a Mexico agreement will be leveraged to extract concessions from Canada.

On the other hand, Canadian economic data has been robust. Friday’s employment report beat expectations and even though the details were soft, many economists suggest the data points to rising wage inflation. USDCAD is consolidating in a 1.3010-1.3190 range. A decisive break above 1.3200 will target 1.3380 while a break below 1.3010 targets 1.2950.

USDCAD
Source: Saxo Bank
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