December 17, 2019
USDCAD open 1.3168-72 (6:00 am EST) Overnight range 1.3161-1.3183
Canadian manufacturing shipments fell 0.7% in October for the second consecutive monthly decline. StatsCanada said that transportation equipment and metal product industries posted the largest declines. USDCAD ignored the news. US Housing Starts and Building Permits posted solid gains,but the news was not a factor for traders.
The US dollar opened with losses against GBP, and the commodity currency bloc, while being mostly unchanged against the rest of the G-10 majors.
FX Market Snapshot
Change in currency value against the US dollar from NY close to NY open
Source: Saxo Bank/IFXA
GBPUSD got knocked silly after UK Prime Minister Boris Johnson said he would enact a law that would make it illegal to extend the Brexit transition period beyond 2020. GBPUSD dropped from 1.3334 to 1.3235 in Asia, then rebounded to 1.3300. Prices accelerated lower at the European open and dropped to 1.3140, filling the post-election gap in the process. UK employment data was a mixed result. The unemployment rate was steady at 3.5% in November, but wage growth was soft. Average earnings, including bonus (3 month, y/y) rose3.2% compared to forecasts of a 3.4% rise.
Yesterday, Bank of England Governor Mark Carney said that the probability of a disorderly Brexit had declined but Boris Johnsons remarks made a mockery of that statement.
Chart GBPUSD 30 minute
Source: Saxo Bank
EURUSD opened at its overnight peak of 1.1158, garnering a bit of support from slightly better than expected Eurozone trade data. Prices were supported by EURGBP demand. The short term EURUSD technicals are bullish above 1.110, looking for a break of 1.1180 to extend gains to 1.1240.
USDJPY is an afterthought. It drifted in a narrow 109.50-62 range, coinciding with US Treasury yields trading sideways in a 1.85-1.87% range.
AUDUSD bulls got side-swiped following the release of the minutes from the Reserve Bank of Australia monetary policy meeting of December 3. The minutes were deemed to be more dovish than expected and left further easing on the table. AUDUSD dropped from 0.6884 to 0.6845 and opened in New York near the overnight low. NZDUSD consolidated its recent US/China trade deal gains.
The prospect of a US/China Phase 1 deal has underpinned WTI oil prices which are trading above $60.00/barrel.
USDCAD tested support at 1.3115 yesterday, and it held. Prices climbed steadily, but the rally stalled near the December downtrend line in the 1.3180 area. USDCAD support stems from general commodity currency bloc weakness. Also, yesterday, the Canadian Finance Minister announced a $6.8 billion increase in the deficit of the Canadian “budget that balances itself.”
USDCAD Technical View
The intraday technicals are bearish while prices are below 1.3190 and are looking for a break of support in the 1.3105-15 area to extend losses to 1.3040 and then 1.3010. A move above 1.3190 suggests renewed 1.3115-1.3340 consolidation. For today, support is at 1.3140 and 1.3115. Resistance is at 1.3190 and 1.3230. Today’s Range 1.3130-1.3210
Chart: USDCAD 4 hour
Source: Saxo Bank