August 18, 2020
USDCAD Open (6:00 am) 13158-62, Overnight Range 1.3155-1.3230
Source: Saxo Bank/IFXA Ltd
Morneau said he aspired to be the Secretary-General of the Organization for Economic Co-operation and Development (OECD). OECD officials are likely asking “Why us?”
The Canadian dollar soared on the news. Not really, but USDCAD traded lower throughout the overnight session. The slide had nothing to do with Morneau. Its been happening for a few days. The US dollar closed with small losses across the board on Monday, and it continued to be sold overnight.
USDCAD selling is not a made in Canada phenomenon, but a product of US dollar malaise world-wide. American political dysfunction, riots, and stubbornly high coronavirus infection levels. USDCAD is undermined by firmer oil prices and by stop-loss selling, on the break of support at 1.3190. However, the sustainability of the move is questionable as thin August markets distort reality.
The falling greenback attracted gold bugs. XAUUSD climbed from $1980.97 to $2009.97, underpinned by ongoing US/China tensions and the American’s latest action against Huawei.
EURUSD is flirting with double-top resistance in the 1.1909 area, despite reports that German COVID-19 cases had their biggest increase since April. There are reports that Russia President Putin called German Chancellor Merkel and warned her that EU interference in Belarus affairs was “unacceptable. The EU also has problems with Turkey’s incursion into Greece territorial waters. EURUSD traders don’t care and are eyeing 1.2020, on a break above 1.1909. There weren’t any Eurozone economic reports of note.
GBPUSD is trading at its overnight peak of 1.3173 after closing at 1.3101. Traders ignored news that venerable UK retailer Marks and Spencer announced 7,000 job losses. Instead, they focused on a story in the Independent, claiming the EU is ready to ease their demands for the UK to maintain EU rules covering tax breaks and state subsidies.
USDJPY dropped from 106.04 to 105.41 on the back of lower US Treasury yields, and a dash of “risk-aversion” selling from COVID-19 concerns and US/China relations.
AUDUSD got an added lift from the RBA minutes, although they didn’t offer any new insight. The central bank suggested interest rates would remain unchanged. NZDUSD rallied as well, and both currencies found support from broad US dollar weakness.
US Building Permits and Housing Starts data is on tap today.
USDCAD Technicals: USDCAD technicals are bearish below 1.3230 with the decisive break below 1.3190 opening the door to a test of support at 1.3100. Only a break above 1.3330 would negate the downside pressure. For Today, USDCAD support is at 1.3150 and 1.3100. Resistance is at 1.3205 and 1.3330. Today’s Range 1.3110-1.3190
Chart: USDCAD daily
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank
