September 12, 2019

USDCAD Open (6:00 am EDT) 1.3187-90         Overnight Range 1.3179-1.3215.

European Central Bank (ECB) President Mario Draghi fired the big guns today.  The ECB announce a brand-new quantitative easing program and cut deposit rates deeper into the red. EURUSD collapsed.  In Mr. Draghi first year as ECB president, he stunned markets with his assertion he “would do whatever it takes” to save the euro.  One month away from the end of his tenure, he did it again.

EURUSD jumped to 1.1070 then dropped to 1.0960 immediately following the announcement. 

The US dollar opened in Toronto with modest losses across the board but that changed after the ECB announcement.  The US dollar is mixed as of 5:30 am in Vancouver with EURUSD the worst performing currency against the greenback.

FX Market Snapshot

Change in Currency value vs the US dollar-   NY close to NY open

Risk sentiment turned positive in Asia, overnight.  President Trump tweeted “At the request of the Vice Premier of China, Liu He, and due to the fact that the People’s Republic of China will be celebrating their 70th Anniversary…. on October 1st, we have agreed, as a gesture of good will, to move the increased Tariffs on 250 Billion Dollars worth of goods (25% to 30%), from October 1st to October 15th.”

Asia FX reacted like Trump’s tweet was a big deal.  AUDUSD, and NZDUSD rallied as did US Treasury yields and the major Asia equity indices.

GBPUSD chopped about in a 1.2317-1.2340 range.  The UK Government published “no-deal Brexit” scenarios which suggested a nasty disruption to the UK economy.  A bad news Brexit is already reflected in current GBPUSD levels, so the report didn’t spark a new wave of selling.

AUDUSD jumped to 0.6886 from 0.6862, supported by rising equities, higher commodity prices and the perception of an improved tone to the US/China trade spat.  The short term technicals are bullish while prices are above 0.6850, targeting 0.6920.

NZDUSD rallied alongside Aussie in Asia but took a turn for the worse in Europe.  Prices dropped from the overnight peak of 0.6448 to 0.6412 before recovering slightly in Toronto trading.  The failure to crack above resistance at 0.6450 contributed to the sell-off.

The drop in oil prices underpinned USDCAD, which has failed to break support in the 1.3130 area.  USDCAD continues to trade sideways. The topside appears capped at 1.3230 due to expectations that the Bank of Canada will keep interest rates on hold even if the Fed cuts rates next week.

Today’s US inflation and weekly jobless claims data was as expected.

USDCAD Technical View

The intraday USDCAD technicals are bearish while prices are below 1.3220 looking for a break of support at 1.3130 to extend losses to 1.3050.  A break above 1.3230 targets 1.3330.  For today, USDCAD support is at 1.3130 and 1.3090.  Resistance is at 1.3230 and 1.3260.  Today’s range 1.3130-1.3230

Chart: USDCAD 4 hour

Source: Saxo Bank