The Loonie keeps the positive momentum
Monday 10 June, 2019
Daily Currency UpdateIt is known that President Trump likes to use tariffs to negotiate and Mexico's Peso was under severe pressure last week along with a proposed U.S. levy on Mexican exports. However, after the FX market close on Friday, President Trump tweeted, "I am pleased to inform you that The United States of America has reached a signed agreement with Mexico…" It is too early to tell whether the agreement reached Friday evening will lead to the lifting of the tariff threat in the future. However, the Loonie is realizing the benefits from Trump's decision of calling off planned tariffs, which were very welcomed by Republicans and others who advised that the tariffs would damage the U.S economy, slow job growth, and interrupt a trade deal between Canada, the U.S. and Mexico, known as the USMCA, which still needs lawmaker ratification.
Technically speaking, the USD/CAD pair is oversold, last Friday, it was trading above its 200 moving average, representing an approximated rate of 1.3265. However, at the time of this writing, it is trading ten pips below it, at 1.3255. It is too early to say whether it will continue to fall despite that it has broken an uptrend support. However, in the longer term, if this breakout materializes, the USD/CAD might try to test 1.3120. For today, two crucial supports are 1.3240 and 1.3192. On the flip side, two resistance levels are 1.3288 and 1.3364 and some less critical resistance levels are 1.3315 and 1.3338.
Key MoversIn contrast with Canadian economic data, the employment numbers in the U.S. are weakening. U.S. non-farm payroll employment increased by a meager 75,000 in May, compared with a consensus estimate of 180,000. However, the unemployment rate remained at 3.6 percent, the lowest rate since December 1969. The May payrolls fell well short of the 224,000 jobs (revised down from 263,000) created in April. The worst month so far was in February, when employers added just 20,000 jobs amid bitter winter weather. People’s Bank of China Governor Yi Gang said that his meeting this weekend with U.S. Treasury Secretary Steven Mnuchin would probably be a “productive talk, as always.” He also added that China has “tremendous” monetary and fiscal policy space to make adjustments to the economy should the trade war worsen. The USD/CNH pair falls 0.22 percent this morning (stronger Chinese Yuan).
- USD/CAD: 1.3240 - 1.3340 ▲
- EUR/CAD: 1.4990 - 1.5039 ▲
- GBP/CAD: 1.6800 - 1.6866 ▲
- AUD/CAD: 0.9226 - 0.9257 ▲
- NZD/CAD: 0.8703 - 0.8863 ▲