Asia Pacific Market Open Talking Points
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US-Mexico Trade War Fears Sink Sentiment
The anti-risk Japanese Yen and Swiss Franc simply outperformed their main counterparts, benefiting from a bout of threat aversion. This was triggered by US President Donald Trump threatening to impose tariffs on Mexico, doubtlessly opening up a brand new entrance on the commerce conflict along with China and doubtlessly with Europe. A few weeks in the past, Mr Trump postponed a choice to impose auto tariffs on the latter.
Due to the unlucky timing, this raised considerations over the way forward for ratifying the USMCA, which is the substitute to NAFTA. While performing White House Chief of Staff Mick Mulvaney famous that the tariffs are “fully separate from commerce”, prime Democrat Nancy Pelosi stated that Trump was “sowing chaos” relating to the levies. For the USMCA to be permitted, it should move by way of the US Congress.
Doubts over the commerce deal sapped demand for the Canadian Dollar, and it was the worst-performing main as sentiment-linked crude oil costs capped their worst month (~ -16%) since November. The S&P 500 in the meantime ended the week 2.5% to the draw back in its worst 5-day efficiency this yr up to now. Meanwhile, the US Dollar fell as Fed price minimize bets rose, boosting gold costs as anticipated.
Canadian Dollar Technical Analysis
Against the Canadian Dollar, USD underperformed. USD/CAD left behind a Shooting Star candlestick on Friday, which is an indication of indecision. This follows persistent consolidation for the reason that finish of April and raises uncertainty over upside follow-through. Negative RSI divergence additionally warns of ebbing upside momentum. Near-term help seems to be at 1.3469 with resistance at 1.3521.
USD/CAD Daily Chart
Chart Created in TradingView
Monday’s Asia Pacific Trading Session
As the brand new week begins, all eyes will likely be on how sentiment unfolds and whether or not or not threat aversion might find yourself working in the US Dollar’s favor given a price minimize from the Fed. China Caixin Manufacturing PMI is up subsequent, however the Australian Dollar might wrestle to search out follow-through given the proximity of the RBA price choice the place markets are anticipating a minimize in early Tuesday commerce.
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— Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the feedback part under or @ddubrovskyFX on Twitter