The Canadian dollar is rising to record highs after reaching a trade agreement with the United States
The BTPs and the euro extended a rebound from their respective session lows as Italian budget uncertainty takes a backseat to risk-on tone spurred by a U.S.-Mexico-Canada Agreement trade deal by Canada, U.S., and Mexico to replace NAFTA.
The Canadian dollar and Mexican peso lead gains among major currencies, as Turkey’s lira outperformed after preliminary data showed that the trade deficit narrowed in September.
The S&P futures hit their highest level in more than a week, while bund and Treasury futures extended their declines. Treasury yields were up 1bp-2bp across the curve, and bond yields were up 2bp-3bps.
WTI crude climbed for the third straight day, with nickel leading base metals lower in London trading, with aluminum being the exception.
The European session yesterday featured the Italian budget crisis that seems to push the EURUSD even lower, however, positive news from the U.S., Mexico, and Canada on entering into the USMCA has given another bout of risk-on sentiment as there could be some good coming from the trade negotiations that are happening.
The Canadian dollar and the Mexican peso rallied against the greenback as U.S. President Donald Trump was set to sign a successor to the North American Free Trade Agreement. Treasuries fell with the yen as demand for haven assets waned, while the dollar also slid, and U.S. equity futures rose. European stocks traded in the green while Italian bonds faced continued selling pressure as investors awaited the European Union’s response to the country’s proposed deficit target. Markets in Australia, China, and Hong Kong were closed for public holidays.
EUR/USD – Euro gains Monday were limited as data showed growth in euro-area factory output slid to the weakest pace in two years. EUR/USD was little changed at 1.1623, halting a three-day decline. The immediate resistance is located at 1.1650 followed by 1.1760. Immediate support can be found at 1.1525 followed by 1.1480. Looking forward to trading in a possible range today from 1.1500-1.1590
GBP/USD – GBP/USD rose to 1.3117, set for its first gain in four days. The currency was helped by better-than-expected U.K. manufacturing data. The immediate resistance for today is 1.3150-90 followed by 1.3275. Immediate support can be found at 1.3000 followed by 1.2960. Look for a possible trading range today from 1.2960-1.3050.
USD/JPY – USD/JPY rose 0.2% to 114.05 after climbing for 2 straight quarters; the pair touched 114.05, its highest level since November 9. The immediate resistance is at 114.35 followed by 114.60. Immediate support can be found at 113.30 followed by 112.55.
USD/CAD – The Canadian dollar strengthened against the U.S. dollar after Canada, Mexico and the U.S. reached a new trade deal to replace the North American Free Trade Agreement. USD/CAD dropped 0.8% to 1.2800, its lowest level since May 22. The immediate resistance is at 1.2910 followed by 1.3050. range today from 1.2780-1.2850
USD/ZAR – The rand has held onto the gains it made last week, opening at R14.10/$ on Monday morning. It was trading 0.49% stronger at R14.07/$ by 11:00.
The rand and another emerging market (EM) currencies managed to defy the US Federal Reserve Bank’s rate hike and trade tensions last week, Bloomberg reported.
“The Rand showed remarkable resilience in September after testing R15.7000 to close the month of at R14.1000. The resilience of the rand also held, even though the US dollar got on the front foot,” Andre Botha, senior dealer at TreasuryONE noted in a market update.
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