July 25, 2019
USDCAD open (6:00 am EDT) 1.3128-31 Overnight Range: 1.3130-1.3143
The European Central Bank (ECB) left rates unchanged. They said “the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively.” That decision wasn’t a slam dunk as some analysts though that they might trump the Fed and beat them to the rate cut punch.
However, what knocked EURUSD from 1.1142 to 1.1117 was the following statement. “The Governing Council also underlined the need for a highly accommodative stance of monetary policy for a prolonged period of time, as inflation rates, both realised and projected, have been persistently below levels that are in line with its aim. Accordingly, if the medium-term inflation outlook continues to fall short of its aim, the Governing Council is determined to act, in line with its commitment to symmetry in the inflation aim.” Today’s news sets the stage for a tense ECB meeting in September.
The single currency didn’t get any support from the German IFO Surveys. Business Climate, Current Assessment and Expectations were all lower than forecast, which Nordea Bank analysts suggest, points to a recession in Germany.
GBPUSD is steady. Prime Minister Boris Johnson filled his Cabinet with Brexit hardliners, and he could face a confidence motion in the coming days. GBPUSD drifted higher since New York opened.
In Asia, USDJPY dipped as US Treasury yields ease amid ongoing South Korea and Japan tensions. AUDUSD got slapped lower after RBA Governor Lowe said low rates could be around for an extended period. NZDUSD suffered after Westpac Bank predicted more rate cuts from the RBNZ.
WTI oil prices rallied, rising from yesterday’s New York close of $55.91 to $56.52. Prices are supported by falling US crude inventories and broad US dollar strength. News of another round of face-to-face US/China trade talks added support.
USDCAD consolidated recent gains in a narrow range but stayed within spitting distance of major resistance at 1.3160. There aren’t any Canadian data available which leaves direction dictated by broad US dollar moves.
Today’s US Durable Goods Orders data is expected to rebound to 0.7% from May’s disappointing 1.3% decline.
USDCAD Technical Outlook
The intraday technicals are bullish while prices are above 1.3110, looking for a break above 1.3160 to extend gains to the 1.3230-50 area. A break below 1.3110 will lead to a retest of support in the 1.3040-60 area. Today’s Range 1.3110-1.3210
Chart: USDCAD 30 minute.