USD/CAD makes a sharp U-turn, slumps below 1.3430

Treasury Sec. Mnuchin says they are close to deal with Canada on tariffs.
BoC's core CPI drops to 1.5% in April.
US Dollar Index turns flat near 97.50

Eren Sengezer FXStreet

The USD/CAD pair rose to a weekly high of 1.3493 in the early NA session but failed to push higher and changed its direction in the last hour to erase all of its daily gains. As of writing, the pair was down 0.2% on a daily basis at 1.3433.

Earlier today, Statistics Canada reported that inflation, as measured by the Consumer Price Index, ticked up to 2% on a yearly basis in April and came in line with the market expectation. However, the Bank of Canada's core CPI, which strips volatile energy and food prices, fell to 1.5% and missed the analysts' estimate of 1.8%, suggesting that the BoC is unlikely to continue to hike rates in a soft inflation environment and weighed on the loonie.

However, following the initial spike in reaction to the data, the pair made a sharp U-turn with the latest trade headlines helping the CAD gather strength. According to the Wall Street Journal, Treasury Secretary Mnuchin said they were close to an understanding with Mexico and Canada on resolving steel and aluminum tariffs.

On the other hand, several news outlets reported that the Trump administration was planning to delay tariffs on European car imports to help the risk appetite return to markets and hurt the demand for the safer greenback. The US Dollar Index, which rose to 97.70 earlier in the session, erased its gains and turned flat near 97.50. Today's data from the U.S. showed that retail sales and industrial production both declined in April but was largely ignored by the markets.

On Thursday, manufacturing shipments and ADP employment change data from Canada will be looked upon for fresh impetus. The U.S. economic docket will feature weekly jobless claims and housing starts figures.

Technical levels to watch for

The pair could face the first hurdle at 1.3500 (psychological level) ahead of 1.3520 (Apr. 24 high) and 1.3600 (Dec. 21, 2018, high). On the downside, supports are located at 1.3425 (daily low), 1.3400 (50-DMA) and 1.3345 (Apr. 23 low).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD off highs, back to around 1.1900

EUR/USD keeps its strong bid bias in place despite recedeing to the 1.1900 zone following earlier peaks north of 1.1900 the figure on Monday. The US Dollar remains under pressure, as traders stay on the sidelines ahead of Wednesday’s key January jobs report, leaving the pair room to extend its upward trend for now.

GBP/USD hits three-day peaks, targets 1.3700

GBP/USD is clocking decent gains at the start of the week, advancing to three-day highs near 1.3670 and building on Friday’s solid performance. The better tone in the British Pound comes on the back of the intense sekk-off in the Greenback and despite re-emerging signs of a fresh government crisis in the UK.

Gold picks up pace, retargets $5,100

Gold gathers fresh steam, challenging daily highs en route to the $5,100 mark per troy ounce in the latter part of Monday’s session. The precious metal finds support from fresh signs of continued buying by the PBoC, while expectations that the Fed could lean more dovish also collaborate with the uptick.

Crypto Today: Bitcoin steadies around $70,000, Ethereum and XRP remain under pressure

Bitcoin hovers around $70,000, up near 15% from last week's low of $60,000 despite low retail demand. Ethereum delicately holds $2,000 support as weak technicals weigh amid declining futures Open Interest. XRP seeks support above $1.40 after facing rejection at $1.54 during the previous week's sharp rebound.

Japanese PM Takaichi nabs unprecedented victory – US data eyed this week

I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.

Ripple exposed to volatility amid low retail interest, modest fund inflows

Ripple (XRP) is extending its intraday decline to around $1.40 at the time of writing on Monday amid growing pressure from the retail market and risk-off sentiment that continues to keep investors on the sidelines.