Picture: ABC Inc

September 30, 2020

USDCAD open (6:00 am ET) 1.3396-00, Overnight Range 1.3375-1.3419

  • Global equities and US Futures slump following “debate”
  • Upbeat China PMI data ignored by FX markets
  • Canada GDP rises 3.0% in July,  as expected

FX Ranges at a Glance  

Source: IFXA Ltd/RP

FX Recap and Outlook:  The Canadian economy grew as predicted by Stats Canada, although it the pace of the growth was sharply lower than what was seen in July.  Still, 3.0% m/m growth is healthy.  US Q2 GDP dropped -31.4%, ugly , but expected.  The US ADP employment rose 749,000, while Chicago PMI, accidently released early, jumped to 62.4 in September, a gain of 11.2 points. The so-called risk currencies, (AUD, NZD, CAD) firmed after the news.

The highly anticipated Trump/Biden debate turned into a geriatric version of a UFC title bout weigh-in, without the decorum.   Trump was loud, obnoxious, and oblivious, clearly rattling a doddering Joe Biden, who at one point said “Will you shut up, man? 

There was no clear winner or loser, but if overnight equity markets are a guide, Trump lost.  A 1.5% drop in the Nikkei 225, led Asia equity markets lower. European bourses are in the red, and Wall Street futures are pointing to a negative open.

EURUSD traded lower, falling from 1.1754 to 1.1694, weighed down by soft equities, and mild risk aversion sentiment.  Dovish comments by ECB President Christine Lagarde’s comments didn’t help.  She hinted that the ECB strategy review would implement measures to allow inflation to overshoot targets.  Traders ignored better than expected German Retail Sales and Unemployment data.

GBPUSD traded sideways in Asia and then drifted lower in Europe.  Prices are trading in the middle of the 1.2807-1.2772 range.  UK Q2 GDP fell 19.2% q/q, a tad better than the -20.% q/q, expected.  The currency is underpinned by Brexit news. t Britain offered the EU a three-year transition period for European fishing fleets, which is seen as a sign that the talks are progressing in the right direction.

USDJPY got bounced around during the Trump/Biden debate, only to open in NY where it closed.

AUDUSD and NZDUSD did not get any benefit from the steady China Manufacturing PMI data.  Instead, both currency pairs slumped with the drop in stocks,  Prices have bounced off their lows in early NY trading.

USDCAD is unwinding Asian gains and has dropped to 1.3380 in NY, after peaking at 1.3419 in Asia. Prices are tracking antipodean price action, rather than EURUSD while ignoring a drop in WTI oil prices.  USDCAD could rally if expected  month end demand occurs.

USDCAD Technicals: The technicals are bullish.  The September uptrend line comes into play at 1.3240, which is guarded by minor trendline support at 1.3360. However, resistance in the 1.3415-20 area has proved formidable.  A break above this level will shift the focus to 1.3550, while a move below 1.3360 targets 1.3250.  .  For today, USDCAD support is at 1.3360 and 1.3310.  Resistance is at 1.3420  and 1.3480. Today’s Range 1.3360-1.3460

Chart: USDCAD 4 hour

Source:  Saxo Bank

FX open (6:00 am EDT) High, Low, and previous close

Source:  Saxo Bank