July 8, 2019
USDCAD Open (6:00 am EDT) 1.3071-74 Overnight Range 1.3053-1.3081
USDCAD gave back all of Friday’s post-NFP gains by the end of the day and then consolidated those losses overnight. Friday’s surge in WTI oil prices to $57.86 stopped the USDCAD rally cold. Iran caused the uptick in oil prices when it said it would increase enriched uranium production beyond the EU treaty terms. USDCAD also suffered from the perception that the Bank of Canada policy statement on Wednesday will be neutral, which contrasts against the nearly universal expectation that the Fed will cut US rates to 2.00-2.25% on July 31. Bearish USDCAD technicals are also weighing on the currency pair. However, the downside may be limited as BoC Governor Stephen Poloz may be reluctant to give USDCAD bears any incentive, especially as the RBA, RBNZ and ECB are cutting rates and devaluing their currencies.
The US dollar is opening close to unchanged after posting gains across the board by the end of trading on Friday. Traders kept their powder dry ahead of Fed Chair Jerome Powell’s Semiannual Monetary Policy Report to Congress (House) on Wednesday. (it’s repeated to the Senate the next day) Markets are hoping for some more clarity around the Fed’s rate cutting intentions ahead of the FOMC meeting. Friday’s employment report is enough to support a sidelined Fed, although Trump would lose his shirt.
Reuters reported that Turkey President Tayyip Erdogan fired his Central Bank President on the weekend. Markets believe that Erdogan wanted lower interest rates. USDTRY gapped higher at the Asia open, rising from 5.6000 to 5.8158 before settling lower at 5.72.34. The White House denied that Trump forwarded the story to Jerome Powell, as a “heads-up.”
USDJPY traded with a bid, supported by a jump in US Treasury yields. GBPUSD continued to trade with a negative bias. EURUSD was undermined by soft economic data and news that Deutsche Bank was blowing off 18,000 employees and bailing out of its global equity business altogether.
The US and Canadian economic data calendars are empty, suggesting a quiet summer trading session, ahead.
The intraday USDCAD technicals are bearish while prices are below 1.3120, looking for a break below 1.3450 to extend losses to 1.2990. FX price action around major “big figure” levels tends to be choppy with lot’s of false breaks. However, a decisive move below 1.3000, would turn the level into resistance. A rally above 1.3120 targets 1.3160 but only a move above 1.3360 would negate the downward bias. For today, USDCAD support is at 1.3040 and 1.3010. Resistance is at 1.3090 and 1.3110. Today’s Range 1.3010-1.3090
Chart: USDCAD hourly