The G-10 majors played defence, yesterday. Sanctions, data, diplomatic expulsions, and a Wall Street rally helped underpinned the US dollar in choppy, but low volume trading.  Wall Street managed a rally due to better than expected earnings from Warren Buffet’s Berkshire Hathaway and a rally in Facebook.  The US dollar opened in Asia with gains across the board with Sterling in the spotlight, after another spate on negative “Brexit” reports.

GBPUSD opened in Europe at 1.2996 and dropped steadily until finding a bottom at 1.2920 just after breakfast, in New York.  Profit-taking lifted prices modestly, and GBPUSD opened in Asia at 1.2944. Sunday’s comments by UK International Trade Secretary Liam Fox said the odds of a “No-deal Brexit” were about 60-40.  That warning came on the heels of Bank of England Governor Mark Carney’s comments last week stating that a “no-deal Brexit” was the biggest risk to the UK economy.  UK Halifax House Price data, later today, shouldn’t have any impact on the currency due to the focus on Brexit.  GBPUSD is in a downtrend while prices are below 1.2980.  Today’s break below 1.2974 targets 1.2850 and then 1.2755.

Chart: GBPUSD daily

Source:  Mocaz charts

EURUSD traded choppily inside a 1.1531-1.1569 range.  A poor result with German Manufacturing orders sparked the drop from the high to the low but prices rebounded into the European close.  EURUSD traded sideways in the New York afternoon and opened in Asia at 1.1555.  EURUSD remains under pressure because Eurozone interest rates are staying unchanged until next summer while US rates are going higher, as soon as September.  Germany releases Industrial Prosecution and trade data today.  EURUSD is in a steep intraday downtrend below 1.1560 following the break of support at 1.1590.  A move below 1.1510 targets 1.1450.

Chart: EURUSD

Source: Mocaz charts

AUDUSD and NZDUSD are under pressure due to stagnant domestic interest policies in the face of a hawkish Fed outlook.  On-going China/US trade tensions are also weighing on the currency pair. 

USDCAD got particular attention on Monday.  Saudi Arabia expelled the Canadian Ambassador to the Kingdom, recalled all Saudi students studying in Canada and Saudi Airlines announced flights to Canada in cease August.  The diplomatic row started because Canada’s Foreign Minister tweeted her support for a jailed Saudi dissident.  The Saudi’s took exception to the tweet.  USDCAD rallied on the news, but the rally stalled at 1.3037.  The USDCAD technicals are bullish while prices are above 1.2940 with a move above 1.3040-60 area opening the door to further gains to 1.3150.

Chart: USDCAD 4 hour

Source: Mocaz charts