January 13, 2020
USDCAD open 1.3057-61 (6:00 am EST) Overnight Range 1.3047-1.3065
The Bank of Canada Business Outlook Survey is the key focus for USDCAD traders this morning. Elsewhere, Asia markets opened in a good mood and that is all because the US and China will finally sign Phase 1 of their trade agreement. Aussie and Kiwi dollars and the Chinese yuan rallied while Asia equity indices closed with gains.
The sentiment shifted modestly in Europe sparked by renewed Sterling woes which led to the US dollar opening in New York on a slightly firmer footing. That changed in early trading and only GBP and JPY are weaker than they were at Friday’s NY close.
FX Market Snap shot
Change in currency value against the US dollar Fri. NY close to Vancouver 5:45 am PST)
Source: Saxo Bank/IFXA
GBPUSD traded sideways in Asia, and the plunged in Europe. On the weekend, another Bank of England Monetary Policy committee member added his voice to the chorus suggesting a January rate cut was possible, which helped to cap price gains. A 0.3% m/m decline in November GDP, alongside weaker than expected Industrial and Manufacturing Production data caught GBPUSD traders “long and wrong.” Prices dropped from 1.3043 to 1.2967 but recovered to 1.3090 in New York trading.
EURUSD traded in a 1.1113-35 range. Sizeable option strikes between 1.1100 and 1.1130, which expire today, hampered price action. Eurozone data was not a factor for FX markets leaving prices to consolidate gains following Friday’s mildly disappointing US employment report. The EURUSD technicals are bearish while prices are below 1.1160, looking for a break of support at 1.1085 to extend losses to 1.1025.
Japan was closed Monday, but USDJPY is still bid and probing resistance in the 109.90-110.00 area. Prices are supported by optimism around the signing of the Phase 1 US/China trade agreement, bolster by higher Emerging Market currencies. Steady to firm US Treasury yields are also underpinning prices. The USDJPY technicals are bullish with the break above 109.50 setting the stage for a move above 110.00 to 110.60.
AUDUSD and NZDUSD rallied in Asia and retreated in Europe to open in New York close to unchanged from Friday’s close. AUDUSD seems to be shrugging off the glow from the upcoming US/China trade deal signing. Westpac Bank forecasts that the wildfires may knock 0.2-0.5% off domestic GDP growth may be weighing on the currency pair. The intraday technicals are bearish while prices are below 0.6920
USDCAD quickly shrugged off Asia opening losses and climbed to 1.3065 before consolidating in a 1.3044-65 range until New York opened. This mornings release of the Bank of Canada Business Outlook Survey could boost USDCAD further, if soft economic data into year-end overshadows positive sentiment from the US/China trade deal.
The intraday USDCAD technicals are bullish above 1.3040 looking for a break above 1.3090 to extend gains to 1.3150. For today, USDCAD support is at 1.3030 and 1.3005. Resistance is at 1.3070 and 1.3105. Today’s Range 1.3010-1.3090
The US data calendar is empty, leaving FX markets to seek direction from Wall Street.
Chart: USDCAD 4 hour
Source: Saxo Bank