July 18, 2019

USDCAD open (6:00 am EDT) 1.3052-55           Overnight Range: 1.3044-1.3060

EURUSD erased all its earlier gains when it fell from 1.1243 to 1.1206.  A Bloomberg article triggered the move.  The story said ECB staff were looking into revamping the inflation goal, which may be “price level” targeting.    Traders believed that to be another dovish twist as. price-level targeting is different from inflation rate targeting.  As per Investopedia, while inflation targeting is forward-looking, price-level targeting commits to reversing any temporary deviations from the target rate of inflation. If inflation fell below 2% for a time, the central bank would compensate by aiming for inflation above 2% until average inflation over the whole period had returned to 2%.”

Sterling has been on a tear. GBPUSD rallied from a low of 1.2380yesterday to 1.2485 this morning due to a combination of profit-taking, better than expected UK data, and Brexit news.  UK House Speaker John Bercow accepted an amendment for another vote on whether the next Prime Minister could suspend parliament, to prevent a no-deal Brexit.  An Office for Budgetary Responsibility (OBR) report capped gains when it stated a “no-deal” Brexit would trigger a recession.  UK Retail Sales rose 1.0% in June, easily beating the May result of -0.6%.

In Asia, AUDUSD rallied from 0.7008 to 0.7037 on the back of the Australian Labour report.  Employment growth was flat, but the details were somewhat better than expected, including a gain of 21,100 full-time jobs.

USDJPY drifted lower in Asia and Europe, undermined by lower US Treasury yields.  Prices popped to 107.90 from 107.72 in early New York trading alongside the sinking EURUSD.

USDCAD is stuck in a 1.3010-1.3090 range.  A drop in WTI oil prices offset benefits from broad US dollar weakness and yesterday’s inflation report.  Traders are biding their time ahead of Friday’s Retail Sales data.

USDCAD Technical Outlook

USDCAD is consolidating recent losses inside a 1.3010-1.3100 range.  A break either side will lead to a 0.0050 point move.  The short term technicals are bearish while prices are below 1.3110 but there is a lot of support in the 1.2950-1.2990 area.  For today, USDCAD support is at 1.3020 and 1.2990.  Resistance is at 1.3090 and 1.3120.  Today’s Range 1.3020-1.3090

Chart: USDCAD 4 hour