June 18, 2020

USDCAD Open (6:00 am) 1.3538-42, Overnight Range: 1.3524-1.3607

  • Global equity indexes lower; S&P futures flat
  • Weekly jobless claims were 1.508 million, Philadelphia Fed jumps to 27.5 (forecast -23)
  • Firm oil prices undermine USDCAD
  • GBPUSD choppy after BoE increases QE

Percent change in US dollar since Thursday’s NY open

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Source: Saxo Bank/IFXA

FX Recap and outlook:  US data reports offset each other.  Weekly jobless claims were higher than predicted, while Philadelphia Fed Manufacturing Survey blew away forecasts.  The dollar ignored the news.

The commodity currency bloc was a tad whippy overnight, led by AUDUSD. Australia reported a loss of 227,700 jobs in May and that the unemployment rate rose to 7.1%.  It was a lot worse than expected, and AUDUSD dropped to 0.6839 from 0.6885. The move didn’t last.  Prices rebounded to 0.6862, just before the NY open, as traders concluded US dollar sentiment, not domestic data, drove the currency.

USDCAD got side-swiped by the AUDUSD reaction to the employment report. Prices spiked to 1.3607 from 1.3564 then quickly reversed, to trade at 1.3524 just as NY opened.  Yesterday, Canada May CPI data was far weaker than expected, falling 0.4%y/y, but the news was ignored.  Concerns about another COVID-19 outbreak in the US are supporting prices while steady-to-rising crude prices, limit gains.

FX traders remained cautious ahead of monetary policy announcements from the Swiss National Bank and the Bank of England.  The SNB left rates unchanged and reiterated its commitment to low rates.

The Bank of England announced a £100 million increase in quantitative easing.

GBPUSD dropped to 1.2474 immediately after the Bank of England announced a £100 million increase in quantitative easing.  Prices quickly rebounded to 1.2550, as the news was expected. BoE Chief Economist Andy Haldane voted against the increase. It left its benchmark interest rate unchanged at 0.1%.  FX traders continue to be concerned that negative rates are on the agenda and GBPUSD retreated to 1.2448 in NY trading.

EURUSD continues to consolidate above support at 1.1200-30. The single currency continued to be weighed down by Wednesday’s weak inflation data, while new COVID0—19 cases in the US limited losses.

USDJPY dropped on the back of mild risk-aversion selling due to the US COVID-cases and softer US Treasury yields.

WTI oil prices shrugged off a 1.2 million barrel rise in US crude inventories reported by EIA and climbed to $38.70/barrel before slipping to $3830 in NY trading.  Oil production cuts and expectations for increased demand from China are supporting prices.

US jobless claims will be the focus for traders with the Trump/John Bolton book feud providing the entertainment.

USDCAD Technicals:  The intraday USDCAD technicals are bearish while prices are below 1.3590.  A break below support in the 1.3500-10 area will extend losses to 1.3460.  A topside breach of 1.3590 targets 1.3640.   For today, USDCAD support is at 1.3510 and 1.3470.  Resistance is at 1.3590 and 1.3640. Today’s Range 1.3520-1.3620

Chart: USDCAD 4 hour

Source:  Saxo Bank