September 11, 2019
USDCAD Open (6:00 am EDT) 1.3150-54 Overnight Range 1.3142-1.3158
China announced some tariff exemptions for US products ahead of the October trade talks. Did they blink? President Trump thinks so. He tweeted “China suspends Tariffs on some U.S. products. Being hit very hard, supply chains breaking up as many companies move, or look to move, to other countries. Much more expensive to China than originally thought.” Trump’s gloating may be misguided as US farm products were not on the exemption list. Nevertheless, AUDUSD and NZDUSD rallied on the news, albeit briefly. US dollar opened on a mixed note, led by a 0.21% drop in EURUSD as positions get adjusted ahead of Thursday’s European Central Bank (ECB) meeting.
FX Market Snapshot
Change in Currency value vs the US dollar- NY close to NY open
President Trump is back aboard his “anti-Fed” bandwagon. He tweeted” The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term. We have the great currency, power, and balance sheet….. The USA should always be paying the lowest rate. No Inflation! It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing. A once in a lifetime opportunity that we are missing because of “Boneheads.”
Traders ignored the tirade. EURUSD drifted slightly higher in Asia. Prices tested 1.1055 before sliding steadily in Europe and hitting 1.1009 in Toronto. The European data calendar was empty. That suggests the sell-off was position adjusting ahead of an expected dovish ECB meeting, Thursday.
GBPUSD is in Brexit “never-neverland.” Prices bounced between 1.2343-1.2370 and are trading in Toronto, in the middle of that range.
USDJPY added to its impressive September gains, rising from 107.51 to 107.54 as US 10-year Treasury yields climbed to 1.744% from 1.713%. Prices eased alongside yields in Europe.
AUDUSD climbed to 0.6884 from 0.6850 following the news of China’s tariff exemptions. The rally quickly reversed after a weak Westpac Business Confidence Survey. The news wasn’t a total surprise as the NAB Business Confidence Survey the day before had a similar result. AUDUSD bounced off of resistance in the 0.6880 area with a break below 0.6840, suggesting further weakness to 0.6790. NZDUSD mirrored AUDUSD moves.
USDCAD followed the antipodean currencies lower, getting an added boost from another surge in crude oil prices. West Texas Intermediate (WTI) rose from $57.16/barrel to $58.25/b after the American Petroleum Institute (API) reported a 7.2 million barrel drop in US inventories for the week ending September 6. USDCAD continues to be pressured by bearish technicals and recent robust economic data.
US PPI, Wholesale Inventories and Canadian Capacity Utilization data won’t provide much incentive for FX markets today. The focus is on Thursday’s ECB meeting.
USDCAD Technical View
The intraday USDCAD technicals are bearish while prices are below 1.3190, looking for a decisive break below 1.3140 to extend losses to 1.2950. However, the long term uptrend from September 2017 comes into play in the 1.3060-80 area. For today, USDCAD support is at 1.3140 and 1.3110. Resistance is at 1.3180 and 1.3230. Today’s Range: 1.3110-1.3180.
Chart: USDCAD daily
Source: Saxo Bank