A likely 60-day extension to the China tariff deadline and poor retail sales numbers see the US dollar decrease

Key Movers

The Loonie is not receiving love this morning, despite that, in the last hour, the US dollar index has fallen around 0.2 percent. The resistance level mentioned in yesterday's Commentary was breached this morning, and the USD/CAD is trading at 1.3308, an increase of 0.39 percent.

The main reason for the USD/CAD increase was the manufacturing sales month to month, which came in at - 1.3 percent when the forecast was +0.7 percent. This unexpected number is giving critical reason to the Loonie bulls to unwind long positions.

Technically speaking, the USD/CAD pair is hitting strong resistances around 1.3320 – 1.3330, which were tested in the first week of February. At the same time, important supports are around 1.3270 – 1.3250. Looking at the big picture, the USD/CAD is still within an uptrend from 2017. Crude oil WTI is consolidating in sideways price action however.


The EUR/USD pair has settled higher, trading around the 1.1300 handle this morning after a decline in the last 24 hours. The improved news about US-China trade talks are the likely cause. However, a weaker than expected European Industrial Production print yesterday didn’t do the single currency too many favors in yesterday’s trading session.

On the release side, Germany's economy has avoided falling into recession during the final three months of last year. Europe's largest economy registered zero growth during the fourth quarter of 2018.


The GBP/USD is falling 0.2 percent and it is trading at 1.2816 this morning. The release of UK CPI yesterday saw inflation fall to 1.8 percent year to year in January, sliding below 2.0 percent for the first time since 2017. The new cap on energy prices was the main catalyst for the drop, and levels of inflation are now below the Bank of England’s target. It had little impact on the Cable, however.

Hearsay rumors about the possibility of a further extension to the Brexit deadline were the primary driver of GBP/USD, which traded to a high of 1.2978. However, it has since fallen as the dollar pushed higher over the last 2 hours.

MPs will debate and vote on the next steps for Brexit shortly, as Theresa May continues to push a deal through Parliament. A series of amendments will also be considered for debate.


AUD/USD is increasing 0.35 percent and trading at 0.7110 this morning. Traders are reluctant to do too much in advance of the much-anticipated US-China trade talks however. With little local economic data on the horizon, investors will focus on this as well as a set of China inflation prints, due at 8:30 pm EST.


NZD/USD is holding firm this morning, trading at 0.6845. This represents an increase of 0.73 percent following the post-RBNZ statement rally. The central bank was a lot less dovish than many market participants were expecting, and a short squeeze ensued. Investors will now be looking to local business manufacturing data, as well as US-China talks, of course.