“two-stepping until the FOMC”   Photo: Google Images Public Domain

July 28, 2020

USDCAD Open (6:00 am) 1.3383-87,  Overnight Range: 1.3333-1.3405

• Gold rally pauses within $20.00 of $2,000.00/ounce
• Traders cautious ahead of US stimulus plans and FOMC
• US dollar recoups some of yesterday’s losses overnight

 Source: Saxo Bank/IFXA Ltd

FX Recap and outlook:  Asia equities closed modestly lower,  European bourses turned small gains to losses, and US equity futures reversed earlier gains and are in negative territory, in early NY trading. The US dollar was a tad “bouncy” overnight.  The commodity bloc currencies rallied in Asia then retreated in Europe. FX traders were cautious ahead of the US stimulus debate, and Wednesday’s FOMC meeting.  Traders continue to be concerned about high levels of new US coronavirus cases, but hopeful for a vaccine.  A dearth of top tier economic data exacerbated choppy, rangebound markets.

EURUSD traded steady with a firm bias to start the Asia session, but profit-taking on the back of the US stimulus news drove prices from 1.1773 to 1.1700 just before NY opened. The recent rally stalled below long term Fibonacci resistance at 1.1815 (61.8% of 2018-2020 range).  The momentum indicators continue to warn that the single currency is overbought.

GBPUSD is steady just below the overnight peak of 1.2903, supported by EURGBP selling while ignoring EU/UK trade talk concerns.

USDJPY is bearish after breaking key support levels at 106.05 and 105.50 earlier. Prices are trading at 105.16, the overnight low, undermined by geopolitical risk, and weak US treasury yields.  China announced they were suspending mutual assistance agreements on criminal matters with Canada, New Zealand, and the UK.

AUDUSD and NZDUSD eased alongside broad US dollar demand.

USDCAD followed the lead of the Antipodean currencies.  Prices bottomed out at 1.3334 then bounced to 1.3380.  Recent Commitment of Traders data suggests speculators are still long USDCAD.  A break below support at 1.3330 could get exciting, although the move if it happens, won’t have anything to do with domestic influences.

Today’s US economic calendar is light.  Consumer Confidence and Case-Schiller Home price reports are on tap.

USDCAD Technicals:   The intraday USDCAD technicals are bearish below 1.3390, looking for a break of 1.3330 to extend losses to 1.3270.  A break above 1.3390 would lead to a test of 1.3440.  For today, USDCAD support is at 1.3330 and 1.3270.  Resistance is at 1.3390 and 1.3440.   Today’s Range 1.3340-1.3410

Chart: USDCAD 1 hour

Source: Saxo Bank