The apparent failure of US Congressional talks propelled USD/CAD on Thursday but a stellar September US Retail Sales on Friday did nothing to assist the dollar which closed at 1.3189 two-thirds of a figure below the week’s high at 1.3260 on Thursday. The USD/CAD pair is likely to continue sliding until the markets reassume some degree of economic comparison, Joseph Trevisani, an Analyst at FXStreet, reports.
Key quotes
“When news reports or comments from participants were positive and a deal seemed possible, the dollar sold off with the logic that stimulus would improve the US economy, mitigating overall risk. When negotiations stalled or the sides were said to be far apart or when President Donald Trump temporarily withdrew from the talks, the US dollar gained ground as traders sought the supposed safety of US assets.”
“The sides are still in contact but Democratic House Speaker Nancy Pelosi has told her caucus there are still many differences. Treasury Secretary Stephen Mnuchin is heading to the Middle East in a few days and with less than three weeks before the election, and no new meeting scheduled, the possibility for a deal diminishes daily.”
“The upper border of the original channel is around 1.3000 and will not attract trading. Support lines at 1.3150 and then 1.3050 are substantial with resistance at 1.3250 and 1.3315.”
“The drift lower is the product of two forces. First, the long-running retreat of the US Dollar in the wake of the March panic has not been replaced by a new scenario. Given the lack of competing ideas, the decline continues. Second, the main support of the dollar, aside from the occasional technical intervention, is still the risk-off trade.”
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