Photo: Wikimedia

December 23, 2020

USDCAD open (6:00 am ET) 1.2811-15,  Overnight Range 1.2808-52

  • Brexit deal done-EU27 approves
  • US Senate still voting on COVID 19 Relief
  • US dollar opens on mixed note-GBPUSD suffering Brexit hangover

FX Ranges at a Glance from December 24 close to December 29 open

Source: IFXA Ltd/RP

FX Recap and Outlook:  Welcome back.  Hopefully,  Santa was good to you.  He was very good to EU Chief Trade Negotiator Michel Barnier and his UK counterpart when he showed them the way to a trade deal on Christmas Eve.  Santa was sort of good to the millions of American’s desperately awaiting some COVID-19 Relief funds when he helped convince the Senate and House to pass a bill which included $600.00 cheques  Trump delayed the bill when he demanded the cheques be increased to $2,000.00.  The House approved that amendment, but the Senate needs to vote.

Asia equity indexes closed with gains except those in China.  The UK FTSE100 has climbed 2.30% in the first day of trading following the news of the Brexit deal.  The other European bourses are modestly higher as are US equity futures.

Trading volumes are lighter than usual due to the plethora of traders enjoying an extended holiday break.

GBPUSD rallied from 1.3402 on December 23 to 1.3615 on December 24 following confirmation of the Brexit deal.  Profit-taking drove prices to  1.3432 on Monday, before they consolidated in a 1.3432-1.3522 overnight.  Analysts suggest that Brexit was fully-priced in.  Looking ahead, GBPUSD is supported by broad, positive risk sentiment undermining the US dollar.   However, continuing coronavirus concerns and the expected negative  UK growth impact from Brexit, is slowing gains.

EURUSD traded choppily but with a bullish bias in a 1.2153-1.2257 range since Wednesday.  EURUSD is underpinned by positive risk sentiment from the news that the seemingly never-ending US COVID-19 Relief bill issue is nearly over.  The on-going roll-out of COVID-19 vaccines has tempered concerns about the spike in coronavirus cases in Europe, the US, and other regions.

EURUSD technicals are bullish above 1.2150, and looking for a break above the  1.2270-80 area, to extend gains to 1.2500.

USDJPY bounced around in a 103.34-103.88 range since last Wednesday.

Prices are supported by steady to firmer US Treasury yields in the o,94% area, and the unwinding of safe-haven, long yen trades, on the back of Brexit and US COIV-19 Relief bill news.

AUDUSD and NZDUSD are consolidating gains after the US stimulus bill’s news sparked a shift into the so-called risk assets. AUDUSD traded in a 0.7542-0.7620 range since Wednesday, with prices garnering additional support from higher commodity prices.

USDCAD bounced around like the silver ball in a pinball machine. Prices traded in a 1.2806-1.2874 range since Christmas Eve and are trading at the bottom of the range in NY today.  The improved tone to risk sentiment, higher crude oil prices, and bearish short-term technicals weigh on the currency.

US October Case-Shiller Home prices are expected to rise 6.9% y/y compared to 6.6% in September.  There aren’t any Canadian data reports

 USDCAD Technicals:   The  intraday USDCAD technicals are bearish below 1.2895, looking for a break of support at 1.2805 to extend losses to 1.2750.  A break above 1.2895 suggests a retest of resistance at 1.2960.   For today, USDCAD support is at 1.2805 and 1.2750.  Resistance is at 1.2895 and 1.2950. Today’s Range 1.2760-1.2860

Chart: USDCAD 4 hour

Source:  Saxo Bank

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

Source:  Saxo Bank