Commodity currencies were the strongest pairs today when it came to the majors, as markets shrugged of the reported Trump tariffs as likely to be political showmanship in the grand scheme of things. As a result markets were very much in favour of risk, showing this in the AUD, NZD, CAD and of course the metal markets as well. For the metal markets these rises were nothing to get to excited about however, as they didn't break any key trends and were just bullish action on a sluggish day of trading where the bears were not at home.
The high flying kiwi was on form today as it jumped up sharply on the charts on the back of a weaker USD and risk appetite being strong. This is a little bit of a surprise given that the Global Dairy Trade Auction recorded a drop of -0.6% m/m, so this will have flow on effects for the export market in New Zealand. However, the market is still obviously feeling quite bullish as the previous result saw three very strong rises in the GDT index.
On the charts the NZDUSD last week formed a bit of a double top pattern that still will be worrying the bulls as they failed to crack through resistance at 0.7431. The market has also come up just short of the level below this at 0.7324, which to me shows that while they're still a little hungry the bears are still very much a presence in the market. In the event the bears do take a swipe then I would focus on the 200 day Moving Average (MA) which could act as dynamic support. In addition to the MA, the following support levels are also of keen focus, 0.7171 and of course 0.7054, around that key 70 cent mark which the NZDUSD likes to flirt with.
The other major pair worth noting was of course the CAD, which yesterday saw some bearish action taken against it from the USD as it broke out of resistance on the USDCAD. Today however the heat seem to come of the tariffs as markets speculated that Trump may in fact be trying to prop up the Republican party as it looks to hold a special election in Pennsylvania (a major steel producing state). As a result the markets have been quick to come back into the CAD, but not before raising more questions about tomorrows Bank of Canada rate announcement and the likely comments that will be produced.
The movements today for the USDCAD saw a double top on the hourly chart, and the bears take a swipe lower. The question is though is this a bearish reversal or traders exiting before the next push higher. Certainly the candle shows some exhaustion when it comes to movements lower, and it could be traders accumulating for tomorrows comments. Resistance levels still stand at 1.3035 and 1.3200. Support levels can be found at 1.2921 and of course 1.2800. Overall though, it feels that the USDCAD is set to trend again the question is what direction at present, with a bullish feel being the leading trend thus far.
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