Picture: Pixabay

September 22, 2020

USDCAD open (6:00 am ET) 1.3311-15, Overnight Range 1.3292-1.3344

  • FX markets churn after central bankers speak
  • European equities shrug off yesterday’s Wall Street plunge
  • US dollar opens higher but its off its best levels.

FX Ranges at a Glance

Source: IFXA Ltd/RP

FX Recap and Outlook:  Wall Street plunged yesterday but managed to recoup some of its losses into the close,  The Dow Jones Industrial Average finished the session down 1.84%.  Asia markets were more subdued, and the Nikkei closed with a small gain. European bourses are higher, led by a 0.87% rise in Germany’s DAX index.  Oil prices rebounded, but gold slumped due to the strong US dollar.

Fed Chair Jerome Powell testifies before the Committee on Financial Services.  The text of his speech was released yesterday.   It wasn’t a whole lot different from the FOMC statement.

He noted that: “Many economic indicators show marked improvement.”

GBPUSD was slapped around like the proverbial red-headed stepchild.  Prices flatlined in Asia but tanked in early European trading, falling from 1.2818 to 1.2717. Bank of England Governor Andrew Bailey knocked Sterling for a loop when he said the policymakers discussed negative interest rates. He clarified things when he said it “did not imply that they would adopt negative rates.

GBPUSD roared back reaching 1.2846 in early NY trading.  However, a resurgence of COVID-19 and Prime Minister Johnson’s comments about seeing a “second wave” may limit gains.

EURUSD continues to be weighed down by yesterday’s comments by ECB President Christine Lagarde.  She said the recovery was uncertain, but stimulus can be ramped up.   EURUSD mirrored GBPUSD moves inside a 1.1721-1.1773 range.

USDJPY traded in a 104.55-104.74 range, undermined by safe-haven demand for yen, and bearish USDJPY technicals.

AUDUSD got spanked after Deputy Governor said they were “watching the currency” and that FX intervention was an option.  AUDUSD dropped from 0.7234 to 0.7180 before recouping all the losses in NY trading.

USDCAD price action mirrored that of AUDUSD.  USDCAD rallied to 1.3344, then retreated to 1.3296 in NY.   Traders generally ignore domestic data and events,  but tomorrow’s Throne Speech may be the exception.

Trudeau’s minority government is expected to announce a new series of spending and climate change initiatives.  If it increases the bloated budget deficit, Canada risks becoming the only banana republic in the G-10.

Today’s US data will be ignored in favour of the Q&Q session at Powell’s testimony.

USDCAD Technicals: The intraday technicals are bullish above 1.3170, the uptrend line from the end of August.  Yesterday’s break above resistance at 1.3260 targets 1.3360, and then 1.3500.  For today, USDCAD support is at 1.3260 and 1.3230.  Resistance is at 1.3320 and 1.3360. Today’s Range 1.3260-1.3330

Chart: USDCAD 4 hour

 Source:  Saxo Bank

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

Source:  Saxo Bank