Overnight Range 1.3327-1.3357
The Canadian dollar is weak. It is starting the week very close to Friday’s high of 1.3358, a level not seen since March.
The Asia market got of to a slower start than usual because of the Labour Day holiday in New Zealand.
USDJPY tried and failed to break back above 104.00. Japan’s Trade Surplus widened due to a rise in exports and a decline in imports. Manufacturing PMI also gained. Still, the news wasn’t enough to break the narrow 103.70-104.00 range.
AUDUSD recouped almost all of Friday’s losses as it rose steadily. NZDUSD followed suit but its rally stalled at 0.7175.
EURUSD was steady in Asia. An early European session decline to 1.0860 was rejected and the single currency bounced but was unable to get above 1.0900.
Eurozone PMI data beat forecasts which helped to underpin EURUSD.
GBPUSD dropped to 1.2185 in early Asia trading on “hard Brexit” fears but rebounded in European trading.
Oil prices chopped around in a faily narrow $50.50-$50.96 range. The Iraq oil minister has made his case for an Opec oil production freeze exemption. In another negotiating ploy, he disputed Opec’s estimate of Iraq production. He said that Iraq is producing 500,00 barrels/d more than Opec estimates.
USDCAD is bid. Last Wednesday, Bank of Canada governor, Stephen Poloz spooked markets when he announced that the Governing council discussed rate cuts.
On Friday, poor Retail Sales and weak inflation reports raised the odds of such a cut.
Meanwhile, the CMT FedWatch tool assigns a 64% probability that the Fed will raise rates in December. Diverging interest rate paths and bullish USDCAD technicals will keep the focus on 1.3550
FX markets won’t have a whole lot of tier one data to dictate directions so traders must be content with tracking equity and oil price moves. The US data includes the Chicago Fed activity index and Markit Manufacturing PMI. New York Fed President William Dudley and St Louis Fed President James Bullard will provide the comic relief.
USDCAD technical outlook.
The USDCAD technicals are bullish. There is a steep uptrend line stemming from the October 19 BoC meeting which comes into play at 1.3295, which if broken, would extend losses to 1.3240. However, another layer of support from previous resistance in the 1.3280-90 may prove sticky. A break above the Friday peak will lead to a test of resistance at 1.3395-1.3405 which if broken targets 1.3450.
For today, USDCAD support is at 1.3320 and 1.3280. Resistance is at 1.3360 and 1.3395
Today’s Range 10.3320-1.3395
Chart; USDCAD 30 minute
