August 30, 2019

USDCAD Open (6:00 am EDT) 1.3290-94       Overnight Range 1.3250-1.3309

The Canadian economy is on fire.  Q2 GDP soared 3.7% y/y compared to the forecast for a 3.0% increase.  June GDP rose 0.2% m/m.  USDCAD plunged to 1.3250 from 1.330 on the news.  The losses were not sustained due to broad US dollar strength and expectations for portfolio rebalancing demand for USDCAD.

The US dollar opened in New York on a mixed note posting small gains against the G-10 majors except for the Japanese yen. USDCAD and GBPUSD were close to “unchanged” overnight. It is a different story for the entire month. EURUSD is finishing August in the 1.1040 area which is right where it started. The Japanese yen is the best-performing currency, gaining 2.45% while the New Zealand dollar is the biggest loser, down 4.00%, thanks to aggressive RBNZ interest rate cuts. The Canadian dollar outperformed the commodity bloc currencies but still lost 0.58%

Currency gain/loss vs US dollar from New York open August 1 to New York open August 30. 

Asia FX markets were lively. NZDUSD dropped from 0.6316 to 0.6292 and AUDUSD fell from 0.6734 to 0.6708 following weaker than expected Building Permits in both countries. It is still winter down-under so soft building data is understandable. Prices recovered somewhat into the New York open.

USDJPY chopped about in a 106.30-53 range. Prices were wobbly after a slew of data reports which included Tokyo COI, July Unemployment, Industrial Production, Large Retailers Sales and Retail Trade. However, prices were underpinned by the more positive tone to USD/China trade talks and the steepening of the US 2 year-10 year Treasury curve. It is not inverted this morning.

EURUSD traded with a negative bias in a narrow 1.1034-1.1059 range. Prices are under pressure from weak German July Retail Sales (Actual -2.2% vs forecast -1.0) rising USDCNY and dovish expectations for the ECB.

GBPUSD is steady. Domestic economic reports were second-tier and ignored with traders focused on UK politics.

Today’s US data includes Chicago PMI and Michigan Consumer Confidence.

USDCAD Technical Outlook

The intraday USDCAD technicals are unchanged inside the 1.3240-1.3340 band.  A decisive break above the 1.3340-1.3380 area targets 1.3550 while a break below 1.3230 targets  1.3000.  For today, USDCAD support  is at 1.3240 and 1.3210.  Resistance is at 1.3310 and 1.3340. Today’s Range 1.3240-1.3340

Chart: USDCAD daily