The USD slipped yesterday against a number of currencies, as soft economic data and gains by commodity currencies caused it to retreat. Financial releases such as the factory orders growth rate and the recent surge in oil prices caused the USD to retreat. Financial analysts pointed out that the greenback’s strength peaked on Friday as the US employment report was out, yet was not able to find traction since. Also they pointed out that themes such as Brexit and the US-Sino talks may start running out of steam and fail to provide incentives for the markets. Also they mention that on the contrary there seems to be a risk on mood in the markets as worries for a global slowdown seemed to ease somewhat. USD/CAD dropped yesterday as the Loonie got support from a surge in oil prices. The pair dropped and broke the 1.3360 (R1) support line (now turned to resistance), stabilising somewhat short before the 1.3290 (S1) support line. If the surge in oil prices continues, we could see the pair dropping even further. Should the bears dictate the pair’s direction once again, we could see the pair, breaking the 1.3290 (S1) support line and aim for the 1.3235 (S2) support barrier. If on the other hand the bulls take over, we could see the pair, aiming if not breaking the 1.3360 (R1) resistance line and hiver above it.
Pound gets some support as Brexit talks linger on
The pound found some support yesterday, yet remained in check, as nervousness in the markets regarding Brexit talks remains high. Theresa May seems to be seeking a compromise with Jeremy Corbyn on the terms of Brexit in order to obtain the necessary majority in the UK Parliament. Media reported that UK’s PM could offer to remain in a permanent customs union with the EU in order to win support from the Labour party. At the same time Theresa May is to meet Macron and Merkel ahead of the EU summit on Wednesday and EU diplomats seem to settle to the idea of offering an extension despite the lack of progress. In the inner political stage, Tory hard Brexiteers seem to be in an effort oust the PM, as they fundamentally disagree with her efforts. We expect volatility for the pound to rise again as the stakes for the UK are getting higher and the EU summit draws near. Cable kept in a tight range yesterday, however was able to break above the 1.3070 (R1) resistance line. We could see the pair trading with some bullish tendencies should there be further positive headlines about Brexit reel in. Should the pair find fresh buying orders along its path, we could see the pair, aiming if not breaking the 1.3175 (R1) resistance line. On the flip side, if the pair comes under the selling interest of the market, we could see the pair breaking below the 1.3070 (S1) support line once again and aim for the 1.2970 (S2) support level.
Other economic highlights, today and early tomorrow
In today’s American session we get the US JOLTS Job Openings figure for February and later on the API weekly crude oil inventories figure. In tomorrow’s Asian session, we get from Japan, the core machinery orders growth rate for February as well as Japan’s PPI rate for March. As for speakers, please note that Fed’s Richard Clarida and RBA’s Guy Debelle are scheduled to speak.
GBP/USD H4
Support: 1.3070 (S1), 1.2970 (S2), 1.2875 (S3)
Resistance: 1.3175 (R1), 1.3265 (R2), 1.3350 (R3)
USD/CAD H4
Support: 1.3290 (S1), 1.3235 (S2), 1.3175 (S3)
Resistance: 1.3360 (R1), 1.3425 (R2), 1.3510 (R3)
