US dollar pares overnight gains US dollar pares overnight gains US dollar pares overnight gains

US dollar pares overnight gains

Forex
MO
Michael O’Neill

FX Trader, Loonieviews.net

The world was looking grim when New York traders turned on their screens. The US threat of another $200 billion in tariffs against China had spooked traders during the overnight session. President Trump’s blustering at the NATO conference didn’t help to reassure markets, either. 

However, Bank of France Governor and European Central Bank executive committee member Francois Villeroy managed to lift the shroud of gloom. All he said was that the ECB could raise rates “at the earliest through the summer of 2019.” Suddenly, EURUSD sellers became US dollar buyers, obviously preferring a long-term fantasy of Eurozone policy tightening over the short-term prospect of a full-blown trade war.

EURUSD rallied from 1.1698 to 1.1755, and the commodity currency bloc caught a minor bid. The rally got a bit of an assist from a 0.3% rise in US PPI. The intraday EURUSD uptrend is intact while prices are above 1.1705 with a break of resistance at 1.1790 extending gains to 1.1860.

USDJPY rallied despite the trade tensions but could break above resistance in the 111.40-111.60 area. A topside break would target 113.60 while a drop below 110.80 would lead to a retest of 110.20.

Wall Street was not impressed by ECB rate speculation preferring to focus on the more immediate risks posed by the US tariff plan. The Dow Jones Industrial Average is down 161.18 points while the S&P 500 sank 0.54% as of 13:50 GMT.

The Bank of Canada did not surprise anyone when it raised the overnight rate to 1.75% from 1.25%. The surprise was in the tone of the statement. It was hawkish. The bank expects the global economy to grow by about 3.75% in 2018 and said the Canadian economy was operating close to capacity, assuming 2.8% growth in Q2. The Monetary Policy Report press conference starts at 15:15 GMT . USDCAD, which had climbed to 1.3171 overnight and was sitting at 1.3135, when the statement was released, dropped to 1.30081. Support is at 1.3050 and 1.3005.

USDCAD 4-hour chart. Source: Saxo Bank

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992