September 15, 2020
USDCAD open (6:00 am ET) 1.3156-60, Overnight Range 1.3137-1.3185
- China Retail Sales, Eurozone ZEW, and UK Jobs data improve risk sentiment
- Opec and IEA reports weigh on crude prices
- US dollar softer after mild improvement in risk sentiment
FX Ranges at a Glance
Source: IFXA Ltd/RP
FX Recap and Outlook FX markets were choppy, but rangebound in active trading overnight. Better than expected China August Retail Sales (0.5% m/m vs forecast 0%) and a 5.6% y/y jump in Industrial Production (forecast 5.1% y/y), improved China’s economic growth outlook.
The news supported Chinese stock markets, but Japan’s Nikkei and Australia’s ASX under-performed. European bourses and NY futures are higher, underpinned by Eurozone and UK data.
EURUSD climbed from 1.1860 to 1.1899 and opened in NY near the top of the range. German ZEW data was better than expected. Economic Sentiment was 77.4 compared to forecasts of 69.8. The Current Situation survey was -66.2 (-81.3 in August). The Euro area Economic Sentiment result was 73.9. The news was good for stocks and EURUSD. The intraday EURUSD technicals are bullish above 1.1860, looking for a break above 1.1910 to extend gains to 1.1970.
GBPUSD drifted lower in early Asia trading, then recouped the losses and climbed to 1.2914 in NY. Boris Johnson’s Internal Markets Bill passed its first vote, which is a GBPUSD negative, although you wouldn’t know it from the price action. The UK employment data was better than expected, but the results are tainted due to the UK’s employment support schemes. GBPUSD is bearish below 1.3000.
USDJPY trade sideways in a narrow 105.62-105.80 range. Traders are still looking for direction with COVID-19 vaccine reports supporting risk sentiment, while soft US Treasury yields, limit gains.
AUDUSD rallied following the RBA minutes, which reaffirmed their commitment to low rates with plenty of stimulus. AUDUSD rallied from 0.7269 to 0.7334. NZDUSD was dragged higher alongside AUDUSD, supported by better than expected China Retail Sales data.
Opec cut their forecast for demand in 2020 by 400,000 b/pd, blaming elevated risks from COVID-19. The International Energy Agency followed suit and cut its 2020 oil demand growth forecast.
USDCAD inched lower despite soft crude oil prices. Manufacturing shipments rose 7% compared to a 23% increase in July, which provided a bit of support for USDCAD
US Empire Manufacturing Index was 17 compared to the forecast of 6, which may give equities a bit of support.
However, FX trading should remain somewhat subdued ahead of Wednesday’s FOMC meeting.
USDCAD Technicals: The intraday technicals are bearish below 1.3190, looking for a break of support at 1.3130 to extend losses to 1.3050. A break above 1.3180 targets 1.3250. For today, USDCAD support is at 1.3130 and 1.3110. Resistance is at 1.3180 and 1.3340. Today’s Range 1.3110-1.3180
Chart: USDCAD 1 hour
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank
