September 23, 2019

USDCAD Open (6:00 am EDT) 1.3296-00         Overnight Range 1.3259-1.3303

A series of weaker than expected Euro-area flash PMI reports lit a fire under US dollar bulls following a rather uneventful Asia FX session.

The GBP led the US dollar higher against the major G-10 currencies since Friday’s New York open, followed by EUR.   NZD and CHF are unchanged while JPY is the on currency to post a gain

FX Market Snapshot

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

The commodity currency bloc was wobbly to start the Asia session due to concerns about US/China trade talk progress.  The trade delegates said they were making progress. As usual, President Trump comments caused a stir.  He said he wasn’t interested in a partial trade deal, which by itself seems to be just hot air.  The Chinese delegation followed it up by cancelling a planned trip to farms in Montana. Some analysts viewed that action as evidence of discord.

Risk aversion sentiment flared with news that Trump ordered American troops to Saudi Arabia as a warning to Iran.

Butt-ugly Eurozone and German Manufacturing PMI data knocked EURUSD from 1.1024 to 1.0971, where it found support. Prices inched higher to 1.0985 in early New York trading, but intraday technicals are bearish. Traders are looking for a break of 1.0970 to extend gains to 1.0920 and then 1.0870 while prices are below 1.1040.

GBPUSD continues to retreat from Friday’s 1.2550 peak as the curtain behind the illusion of a last-minute “no-deal Brexit” gets lifted. The major stumbling block of an acceptable solution to the Irish border issue is no closer to being resolved than it was six months ago. The opposition Labour party is in as much disarray as the Conservative party and with just 38 days left until Brexit, time is running out.  Additional negative sentiment occurred with the news of the collapse of the Thomas Cook travel agency, which stranded about 150,000 British travelers. Those travelers are feeling the same way about company officials as Hawaii natives felt about Captain Cook.  GBPUSD dropped from 1.2489 to 1.2424

USDJPY bounced at the Asia open and then dropped from 107.77 to 107.32 in Europe. Mild risk aversion sentiment and falling US Treasury yields undermined prices.  The 10-year Treasury yield sank to 1.683% from 1.763%.

AUDUSD and NZDUSD gave back Asia gains in European trading.

Oil prices traded lower because Saudi Arabia officials said full crude production would resume next week. However, a Wall Street Journal article contradicted that claim, saying it may take “many months” for full production to resume. Nevertheless, WTI oil dropped from $59.10/barrel in Asia to $58.14/b just before the New York open.

USDCAD caught a bid and never let go. Prices started the week at 1.3259 and climbed steadily to 1.3303 before easing back to 1.3290 in Toronto. Concerns that the Bank of Canada may be forced to cut interest rates in October, in response to a slowing domestic economy are supporting prices.

There are only second-tier US economic reports available today and nothing from Canada.

USDCAD Technical View

The intraday USDCAD technicals are bullish while prices are above 1.3260, looking for a break above resistance at 1.3320 to extend gains to the 1.3340-80 resistance zone.  A decisive topside break would target 1.3550 and then 1.3660.  A break below 1.3260 keeps the 1.3040-1.3340 range intact.  For today, USDCAD support is at 1.3260 and 1.3210.  Resistance is at 1.3310 and Chart: USDCAD hourly

Source: Saxo Bank