November 30, 2020
- No news from Opec
- No Brexit deal, or fresh signs of progress
- US dollar slips on month end flows and vaccine hopes
FX Ranges at a Glance
Source: IFXA Ltd/RP
FX Recap and Outlook: The dollar is on the defensive, Opec is on de fence, and the EU and UK are still fencing. Ho-hum.
Asia equity markets closed slightly lower but are still well up on the month. The same holds true in Europe. Equity indexes there are mixed after a stellar performance in November. The French CAC is poised to finish the month with a 21.9% gain, followed by the German Dax with a 15.2% gain. Gold traders took it on the chin. XAUUSD is down 6.4% since the November 2 open.
The Canadian dollar managed to gain 2.6%, which is rather pathetic when compared to the NZD gain of 6.4% or AUD’s 5.0% rally.
EURUSD is grinding higher, rising from 1.1960 to 1.1988, supported by coronavirus vaccine hopes, broad US dollar weakness, and expectations for a Biden-administration stimulus plan. Prices are also supported by hopes that EU/US trade tensions will be dialed back under President Biden.
GBPUSD traded in a 1.3307-1.3356 range with hopes for a Brexit deal underpinning prices. The UK press is full of conflicting rumours with both sides, saying the other side needed to show “pragmatism.”
USDJPY retreated below 104.00 but didn’t like the view and bounced from 103.84 to 104.34. before sliding anew. Japan Retail Trade and Industrial Production data were better than forecast.
AUDUSD and NZDUSD rallied in Asia then turned lower in Europe due to better than expected China PMI data, which suggests China is well on the road to a post-COVID-19 recovery. Traders are looking ahead to the RBA monetary policy meeting tomorrow. The RBA is expected to leave rates and policy unchanged.
Oil prices slumped after reports the cartel (and Russia) failed to agree to an extension to current production cuts. However, the meeting has just begun, so there is lots of time for a result.
USDCAD is currently testing support at 1.2950. Prices dropped from an overnight peak of 1.2994 due to selling pressures from month-end demand, mildly firm crude prices, and broad US dollar weakness. The Federal government releases another fiscal update today. If it has any impact on FX it is likely to be negative as the government continues to spend to support the economy.
Canada Raw Materials Price Index rose 0.5% compared to a drop of 2.2% in September. Building Permits and Industrial Product Price data were weaker than expected. USDCAD traders ignored the news.
US data includes Chicago PMI, and Pending Home Sales.
USDCAD Technicals: The intraday USDCAD technicals are bearish below 1.3020, looking for a decisive break below the 1.2930-1.2950 support zone to extend losses to 1.2850. However, Bolling band and RSI studies suggest USDCAD is oversold and vulnerable to a rebound. For today, USDCAD support is at 1.2930 and 1.2905. Resistance is at 1.3020 and 1.3060 . Today’s Range 1.2930-1.3020
Chart: USDCAD 4 hour
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank