Source:  Statistics Canada

June 30, 2020

USDCAD Open (6:00 am) 1.3695-99, Overnight Range: 1.3655-98

• Canada April GDP falls 11.6% m/m, better than expected
• US dollar adds to yesterday’s gains overnight
• Fed Chair Powell “US economy entered important new phase, sooner than expected”
• China PMI data surprises to upside

Percent change in US dollar

Source: Saxo Bank/IFXA

FX Recap and outlook:  Canada’s economy shrank 11.6% in April.  The results were better than expected, but didn’t help the Canadian dollar.  USDCAD inched higher but remained inside its overnight range as traders are more concerned with quarter-end portfolio rebalancing flows.

The US dollar added to yesterday’s gains when it opened in NY but compared to its June 1 open, it is down against the major-G-10 currencies, with NZD and AUD leading the pack.  GBP was the biggest loser, shedding 0.96%.

In Asia, China’s PMI point to a post-COVID-19 economic recovery.  Better than expected China June PMI data gave the antipodean currencies a boost during the Asia session, but broad US dollar demand in Europe reversed the moves.

The Nikkei 225 followed Wall Streets lead and led the major Asia equity indexes higher.  The trend did not continue in Europe. The UK FTSE 100 index is lower, while Germany’s DAX is higher.  S&P 500 futures are flat to negative and US Treasury yields dropped from 0.653% to 0.633%.  Gold prices (XAUUSD) are trading at the bottom of their overnight range.

FX markets are directionless heading into the US July 4th long weekend.  American markets are closed on Friday, and FX liquidity will start to evaporate after the release of the US employment report, and a host of other data.

Canada Day is tomorrow.  AgilityForex update will not be published

The text of Fed Chair Powell’s opening remarks to the House of Representatives today, were released yesterday.  He said the economy entered an important new phase, sooner than expected, then proceeded to detail a litany of economic woes and challenges.  He also praised the great work done by the Fed and Congress to respond to the pandemic.  It also didn’t offer anything new.

GBPUSD is suffering from news that the economy contracted by 2.2% in Q1 2020 q/q.  Prices are also weighed down by concerns about paying for the UK government’s planned £5 billion infrastructure spending program.

EURUSD continues to consolidate above support at 1.1170.  Eurozone inflation was a tad higher than expected.  CPI rose 0.3% y/y compared to 0.1% previously.

USDCAD is bouncing between 1.3650-1.3700, with prices closely following EURUSD moves.  Soft oil prices are providing some support to the currency pair as are bullish short term technicals.

Today’s US data includes Chicago PMI for June (forecast 45 vs previous 32.3) The Q&A part of the Powell/Mnuchin show at Congress will has potential to create some FX volatility, depending upon the answers the duo provides.

It is Canada Day tomorrow and there will not be an AgilityForex update

USDCAD Technicals:  The intraday USDCAD are bullish above 1.3670, looking for a break above 1.3730 to extend gains to 1.3860.  A break below 1.3630 shifts the focus to 1.3570 support.  For today, USDCAD support is at 1.3650 and 1.3610.  Resistance is at 1.3710 and 1.3740.  Today’s Range 1.3650-1.3730

Chart: USDCAD 4 hour

Source:  Saxo Bank