Trump’s Tough Tariff Talk Awakens CAD & MXN Bears

Will JPY longs continue to unwind? See a forecastto find out!

Talking Points:

  • CAD falls aggressively to 14-month lows on fears of protectionist trade position from a US
  • EUR/JPY becomes a hottest trade of a week in expectation of certain ECB on Thursday
  • Crude Oil revisits 200-DMA

Join Tyler in his Daily Closing Bell webinars during 3 pm ETto plead marketplace developments.

After most fad about EUR/JPY on Monday, that continued aloft today, Tuesday’s concentration was on a North American Free Trade Agreement or NAFTA renegotiations. This news took a Canadian Dollar to a lowest turn given Feb 2016 opposite a USD as a US commerce dialect released a 20% countervailing avocation on Canadian lumber exports. Despite a terribly tiny impactthat lumber creates of sum exports and furthermore of Canadian GDP, this news increased market fears of a US-CA trade conflict,and a Mexican Peso also forsaken to onemonth lows.

Given that Oil has depressed behind to a 200-DMA, traders would do good to compensate tighten courtesy to a subsequent large move. Oil has a new story of aggressively rising from a 200-DMA. However, new news has been putting vigour on Oil, and a mangle next a 200-DMA could see USOil pierce to a lower-$40/bbl zone. Such a pierce could exasperate CAD bears.

Lastly, forward of a Thursday ECB meeting, EUR is stability to find a bid as options traders are display they no longer fear EUR-downside like they once did. Two certain developments are a EURJPY 25D Risk Reversals over 1-month is during a top levels in over a month, and a 1-year 25D Risk Reversals have risen 28% this week per Bloomberg to trade during their top levels given Jan 2015. While a ECB could retreat this march with a apocalyptic outlook, a options marketplace seems to be bearing EUR upside from here.

Interested in saying what IG client’s positioning means for a EUR breakout? Find out here!

Closing Bell’s Top Chart: April 25, 2017, USD/CAD Breaks section of insurgency to new 14-month highs

Trump’s Tough Tariff Talk Awakens CAD amp; MXN Bears

Tomorrow’s Main Event: Australian CPI RBA Governor Lowe Speech

Wednesday will yield a double-shot of fad to traders holding AUD exposure. CPI is set to come out during 01:30 GMT with YoY expectations display a odds of upside risk in a Aussie notwithstanding new weakness. AUD could float a new arise in risk perspective after a French choosing has seen a JPY sell-off and bottom metals find support. After CPI, a speech by RBA Governor Lowe during a Renminbi Global Cities Dialogue could assistance yield clarity and upside for AUD on AUs position economically with China.

IG Trader Sentiment Highlight:USD/CAD Bears 14-Month Highs

Trump’s Tough Tariff Talk Awakens CAD amp; MXN Bears

USDCAD: As of Apr 25, sell trader information shows 34.0% of traders are net-long with a ratio of traders brief to prolonged during 1.94 to 1. The series of traders net-long is 36.0% aloft than yesterday and 13.3% reduce from final week, while a series of traders net-short is 4.6% reduce than yesterday and 76.4% aloft from final week.

We typically take a contrarian perspective to throng sentiment, and a fact traders are net-short suggests USDCAD prices might continue to rise. Positioning is reduction net-short than yesterday though some-more net-short from final week. The multiple of stream perspective and new changes gives us a serve churned USDCAD trade bias. (Emphasis Mine)

Written by Tyler Yell, CMT, Currency Analyst Trading Instructor for DailyFX.com

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