December 10, 2019

USDCAD open 1.3235-39 (6:00 am EST)              Overnight range 1.3227-1.3243

Better than expected German and Eurozone ZEW Survey data underpinned EURUSD while GBPUSD rallied on position adjusting ahead of Thursday’s election.  Traders everywhere where decrypting mixed trade signals from China and the US.

The commodity currency bloc (AUD,NZD, CAD) and JPY opened unchanged  while EUR, GBP, and CHF inched higher ahead of Thursday’s Swiss National Bank and ECB monetary policy meetings.

FX Market Snapshot

Change in currency value against the US dollar from NY close to NY  open

Source:  Saxo Bank/IFXA

The Greater China Regional Director for US Soybean Export Council said that its imports of US soybeans between September and November are 13 times greater than the same period in 2018. President Trump said the US is doing well with the trade talks, on Monday. Those signs of trade deal progress were countered by a report that the US Congress is planning to ban the use of Federal funds for the purchase of chines mad buses and railcars. Another article reported that China expected to be hit with higher tariffs on Sunday.  President Trump is milking the concern for all its worth and could issue an eleventh-hour reprieve for tariff hikes.

EURUSD climbed to 1.1082 from 1.1064 in Asia, underpinned by the German ZEW Economic Sentiment Survey showing a sharp improvement. The index surged 12.8% compared to November and the highest reading since February. Nevertheless, concern ahead of Thursday’s ECB meeting and significant size option expiries today have trapped the single currency in a 1.1050-1.1090 range.

GBPUSD rallied on pre-election positioning rising from 1.3134 to 1.3188 in early New York trading.  Weak UK data, including a flat GDP reading for October, capped the gains.

USDJPY traded sideways in a 1.1056-65 range ahead of tomorrows FOMC meeting. Prices rose and fell on shifting US/China trade sentiment.

AUDUSD rallied in Asia, supported by higher house prices. A speech by RBA Governor Lowe was a nonfactor. The gains were erased in Europe and prices opened unchanged in New York. NZDUSD suffered a similar fate.

WTI oil prices are $58.68, well below their overnight peak of $59.35/barrel. Prices are undermined by negative US/China trade sentiment.

USDCAD is stalled. The short term technicals are bullish, but upside momentum has stalled, in part due to the surge in oil prices. Friday’s weak Canadian employment report has raised concerns that it could lead to a rate cut in January. However, other analysts believe that the October election distorted the data.

Today’s US data releases are the second tier and will be ignored ahead of the FOMC meeting. The Canadian economic calendar is empty.

USDCAD Technical View

The short term USDCAD technicals are bullish while prices are above 1.3170, looking for a retest of 1.3350, which has capped price gains since the beginning of  October.  The top level is also the 61.8% Fibonacci retracement level of the June-July trading range of 1.3020-1.3560. For today, support is at 1.3230  (100 day moving average and 1.3180. Resistance is at 1.3280 and 1.3310.  Today’s Range 1.3230-1.3280

Chart:  USDCAD daily.

Source: Saxo Bank