USD/CAD Hits Four-Month Lows
Ashraf Laidi | Oct 02, 2018 12:06AM ET
The lesson from the weekend drama was that deals can come together in a heartbeat and that deep pessimism might be the time to buy. The Canadian dollar was the top performer Monday while the yen lagged. The US September ISM manufacturing survey was at 59.8 compared to 60.0 expected.The RBA decision is up next. A new CAD trade was issued, while the JPY trade was stopped out.
Yesterday we noted that it wasn't too late to sell the Canadian dollar and that was the case as the declines continued throughout the trading day as USD/CAD broke the 200-DMA to hit a four-month low late in North American trade. Also note USDCAD is among the most inversely related pairs with equity indices.
The quick turnaround on the NAFTA deal may prove to be a helpful lesson for sterling traders as Brexit negotiations continue. Algos bought GBP heavily on Monday on a newswire headline that gave the impression of May offering something that would likely lead to a deal. Cable instantly jumped a full cent but later gave back nearly all the gains with the text of the report showing that this was a backstop deal contingent on getting full access to the EU; something that's a longshot. Also watch EURGBP closely for GBP's Brexit-related reactions rather than only GBPUSD.
In economic news, IMF leader Lagarde said a downgrade to global growth forecasts would be coming this month.
Italy remains an overhand for the euro as it fell to the lowest in three weeks at 1.1564. We can't envision a major blowup over 0.4 pp on the deficit-to-GDP target but the Italian bond market certainly hasn't been impressed.
Perhaps the news that could reverberate the longest was a roughly 3% rise in WTI and Brent crude with both at the highest in four years. India said it won't import oil from Iran and Japan and South Korea have already made similar announcements.
Looking ahead, the RBA decision is at 0430 GMT (05:30 BST) with no change widely expected. Some economists expect the RBA to hold rates unchanged through 2020 in a sign of the deep complacency that surrounds the central bank.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.