December 17, 2020

USDCAD open (6:00 am ET) 1.2701-05,  Overnight Range 1.2702-1.2749

  • EU/UK find level playing field compromise, Fishing deal on the hook
  • Bank of England ahead-on hold ahead of Brexit
  • US Weekly Jobless Claims jump

FX Ranges at a Glance:  

Source: IFXA Ltd/RP

FX Recap and Outlook:  US Weekly Jobless Claims data jumped to 855,000, well above the forecast for an 800,000 increase and higher than last weeks 862,000 reading.  The Philadelphia Fed Manufacturing Survey disappointed with a reading of 11.1 rather than the 20 expected.  However, the results were not a factor for FX traders as they continued to bask in the glow of yesterday’s FOMC statement.

The FOMC did not do anything to sour global risk sentiment.  In fact, they encouraged it. They tweaked their QE statement from buying Treasury and Agency-backed securities at least at the “current pace over the coming months” to  an indeterminate end date.

US politicians are doing their part to bolster the positive risk outlook.  Congressional leaders made happy noises about the prospects for a COVID-10 Relief package in the neighborhood of $900 billion. To paraphrase the late US Senator Everett McKinley, “a trillion here, a trillion there, and pretty soon you’re talking real money.”

The low-rates-forever theme powered Bitcoin to another all-time high.  BTCUSD touched $23,447.00, overnight, and prices are currently14.7% above yesterday’s close.  Gold prices rallied as well, posting a 1.05% gain.

EURUSD traded steadily higher overnight, rising from 1.2190 to 1.2243.  Eurozone CPI readings were exactly as predicted, and therefore a non-event.  The Swiss National Bank surprised no one when they left interest rates unchanged at -0.75%.   EURUSD technicals are bullish looking for further gains to 1.2280.

GBPUSD continued to climb in early NY trading with prices touching 1.3622 before easing to 1.3595.  The bumps on the “level playing field” issue have apparently been smoothed over with something called a “managed divergence path.  The last remaining issue is fishing rights which reportedly for the UK, is a national pride rather than an economic issue.

USDJPY dropped on the back of broad-based US dollar selling vs the majors.

AUDUSD and NZDUSD rallied, underpinned by positive risk sentiment, and bullish technicals.  AUDUSD got an added lift from better than expected Australia employment data.  The country added 90,000 new jobs (forecast 50,000), and the unemployment rate dropped to 6.8% from 7.0%.  Traders continue to ignore escalating trade tensions with China.

USDCAD dropped alongside the commodity bloc currencies but was the laggard.  Firmer crude oil prices contributed to the USDCAD selling pressure.   The currency pair seems  to have somewhat reluctantly recoupled with the antipodean currencies.

New Yorkers are dealing with a nasty snowstorm which may help curtail trading activity for those banks that forced traders to commute to the office.

USDCAD Technicals:   The intraday USDCAD technicals are bearish below 1.2750, with the decisive breech of support at 1.2720 on daily charts pointing to further losses to 1.2520. The daily RSI studies suggest USDCAD is oversold, but not yest at extreme levels.  For today, USDCAD support is at 1.2690 and 1.2660.  Resistance is at 1.2730 and 1.2760. Today’s Range 1.2670-1.2730

Chart: USDCAD daily  

 Source:  Saxo Bank

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

Source:  Saxo Bank