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Loonie Falls Alongside Oil as Trade Wars Escalate

CAD - Canadian Dollar

The Canadian dollar has run through its daily average true range of 70 basis points through the overnight. The loonie tested the 1.3414 the 20-day moving average, the loonie unwound its gains after concerns of a set back with the US and Chinese trade negotiations. President Trump in a tweet said the US would increase the amount of taxes on Chinese goods entering the US market. The USDCAD pair reversed and trades at 1.3480 at writing this is on the back of falling oil prices, WTI fell 1.27 % to 61.46 dollars per barrel on the fear of decreased demand due to a prolonged trade war between the world's two largest economies. Ivey purchasing manager index figures are set to be released at 10 am today expectations are for 53.0 slightly low from previous of 54.3.

The USDCAD pair finds first and second support at 1.3459 and 1.3422 while first and second resistance is seen at 1.3485 and 1.3522 respectively.

Key Movers

After 50-year record unemployment numbers and better-than-expected nonfarm payroll data, the US Dollar gains were eroded after Trump gave investors a reality check regarding the Sino-US trade talks. Trump has confirmed he will raise tariffs on $200bn of Chinese goods because the trade deal is escalating “too slowly”. This information was tweeted from Trump’s account where he explained that pre-existing tariffs of 10% would be raised to 25% and a further $325bn of untaxed goods may now be taxed at this 25% rate. Trump may receive some backlash for this, as there is speculation that China may reciprocate on US goods. In other news, despite weaker-than-expected inflation data came out from the area, the Australian dollar rose sharply on Tuesday morning after interest rates were held at its record low level.

Expected Ranges

USD/CAD: 1.3404 - 1.3484 ▲

EUR/CAD: 1.5030 - 1.5081 ▲

GBP/CAD: 1.7564 - 1.7630 ▼

AUD/CAD: 0.9374 - 0.9456 ▲

CAD/NZD: 1.1237 - 1.1271 ▼

EUR/USD: 1.1174 - 1.1217 ▼