June 18, 2019

USDCAD Open (6:00 EDT) 1.3426-29   Overnight Range 1.3403-1.3430

Central bankers in Australia and at the ECB did to US dollar bears, what birds do to statues and freshly washed cars. The Reserve Bank of Australia kicked things off when the minutes from the June 4 meeting left no doubt that further interest rate cuts were likely. Stubbornly low inflation, wage growth and the US/China trade dispute were factors putting downward pressure on rates. Despite being “old” news, AUDUSD dropped from 0.6855 to 06834.  NZDUSD traded sideways ahead of Wednesday’s FOMC meeting.

USDJPY dropped from 108.57 to 108.21, in part because of falling US Treasury yields.  The 10-year yield dropped from 2.09% to 2.042%.  Dovish remarks by Bank of Japan Governor Haruhiko Kuroda saying, that since inflation is taking more time to hit price targets, the BoJ must be “patient in maintaining current easing policy.”

Then it was ECB President Mario Draghi’s turn to remind markets that when it came to doves, he was the “boss bird.” Mr Draghi warned that further rate cuts are in the cards if inflation doesn’t pick up and said that growth risks are tilted to the downside.   EURUSD was undermined by soft German and Eurozone ZEW Economic Sentiment Index data, and Core Eurozone inflation for May. (Core CPI -0.1% vs forecast 0.0%)

GBPUSD continued to slide thanks to the improving odds that Boris Johnson may become the next UK Prime Minister.  A break below the 1.2490-1.2500 region targets 1.2085.

WTI oil prices chopped around in a $51.52-$52.00/barrel range.  Prices were supported by Saudi Arabia calls to extend production cuts and undermined by fears of slowing global demand.

USDCAD continues to track broad US dollar moves but remains trapped in the 1.3225-1.3555 range that has contained price action since the beginning of March. Prices are supported by speculation the Bank of Canada may chop rates as early as October.

Canada Manufacturing shipments (forecast 0.4% vs April 2.1%) and US Housing Starts/Building Permits data are due today.

USDCAD Technical Outlook

The intraday USDCAD technicals are unchanged from yesterday.  They are bullish while above 1.3350 looking for a break above the 1.3430-40 area to extend gains to 1.3480 and then 1.3550.  A move below 1.3350 targets 1.3300 and then 1.3240.  The long term uptrend from October 2018 low of 1.2920 stays intact while prices are above 1.3250.  For today, USDCAD support is at 1.3390 and 1.3350.  Resistance is at 1.3440 and 1.3480.  Today’s Range 1.3360-1.3440

Chart: USDCAD  4 hour