USDCAD Open (6:00 am EDT) 1.3253-57 Overnight Range 1.3237-1.3257
The US dollar drifted higher overnight in pre-FOMC meeting position adjusting. Some of the demand is due to lowered expectations for the Fed to cut rates. A week ago, the probability of a 25 bp cut was 92%, according to CME FedWatch. Today, it is 65.8%,
FX Market Snapshot
Change in Currency value vs the US dollar- NY close to NY open
EURUSD consolidated yesterday’s losses, chopping about in a 1.0991-1.1021 range. ECB Governor and Central Bank of France President Francois Villeroy de Galhau warned that sustained high oil prices would lower growth. The ZEW data saw better than expected Economic Sentiment results, but they were still negative. (-22 vs forecast -37.7). Eurozone ZEW sentiment was a tad better than expected but at -22.4, is negative territory.
GBPUSD continues to trade with a negative bias as the Brexit date nears although a lack of fresh “Brexit” news limited the downside. GBPUSD traded in a 1.2394-1.2430 range.
USDJPY saw its entire 108.03-108.36 overnight range in the early hours of Asia trading. The price action coincided with 10-year Treasury yields rising from 1.827% to 1.87.3% before dropping to 1.8210 in early New York trading.
AUDUSD dropped after the minutes of the September 3 RBA policy meeting were released. The minutes showed the door was wide open to another rate cut, possibly in November. AUDUSD dropped to 0.6832 from 0.6870 on the news. NZDUSD traded lower alongside Aussie.
Oil prices touched $62.55/b just before New York opened and then dropped to $61.71/b afterwards. Prices are still well below the 2019 peak of $66.30/b. The lack of military retaliation by Saudi Arabia may have eased concerns about further Middle East hostilities. Also, the fears of a global economic slowdown and concerns that oil supplies are outstripping oil demand may limit price gains.
Today’s Canadian July manufacturing shipments data is forecast at -0.2% (June -1.2%) US data includes Capacity Utilization and Industrial Production.
USDCAD Technical View
The intraday USDCAD technicals are bullish above 1.3240, looking for a test of 1.3290 and then 1.3340. A break below 1.3240 would extend losses to 1.3190. Longer term, USDCAD continues to trade below the mid-point (1.3290) of the February July trading range. For today, USDCAD support is at 1.3240 and 1.3190. Resistance is at 1.3290 and 1.3340. Today’s range 1.3230-1.3290
Chart: USDCAD 1 day
Source: Saxo Bank