EUR/USD, USD/CAD - week's main events backloaded; CAD the main exception
Flat trade, with week's main events from Wed onwards, though Bessent speaks on Iran sanctions today
CAD the main exception, though initial reaction to talk breakdown modest; spec mkt remained short CAD
Key events this week are all largely backloaded, with US PCE prices Wednesday, followed by Nvidia after the close and then Jackson Hole with Warsh speaking Friday. Bessent does have a press conference later today though to discuss the proposed Iran sanctions.
In the meantime, the abrupt breakdown in US-Canada trade talks with Canada pledging dollar-for-dollar tariff response remains the main standout today. USD/CAD backfilled the opening gap and now back up to over 1.38, around +0.3/4% on the session. Around 1.3850 would be a minor 23% pullback on the whole USD/CAD run down from the 1.4250 prior top. At the moment the pair hasn’t even broken the downtrend. Indeed, tehcnicals suggest consolidation of recent oversold trade back to 1.39 would not be damaging the overall bearish weekly chart setup so there is room to give here without suggesting the market is changing stance.
Latest IMM data showed that while CAD shorts had been trimmed in the continuous recovery of recent weeks, short positions were still unusually heavy (almost 2 ½ stdev above normal). In that sense then, the market still has hedging in place and while technically it was oversold on the move down last week, it was not positionally so.