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January 25, 2021

  • German IFO Index weaker than expected
  • US politicians STILL negotiating stimulus plan
  • US dollar opens with mixed to bearish tone

USDCAD open (6:00 am ET) 1.2699-03,  Overnight Range 1.2690-1.2734, Previous Close 1.2733

FX Ranges at a Glance:

Source: IFXA Ltd/RP

FX Recap and Outlook:   Asia stocks ended their session in a happy mood, led by a 2.01% gain in the Hong Kong Hang Seng.  European’s were not so cheery.  The major bourses are in the red, albeit modestly, while Wall Street is poised to open on a mixed note. Gold and oil prices are higher.

American lawmakers are still hashing out the details to President Biden’s $1.9 trillion stimulus plan. Democrats are still wanting to impeach Trump and  expected to send an article of impeachment to the Senate today.

EURUSD traded lower, falling from 1.2172 to 1.2141.  German IFO data was weaker than expected and coupled with last week’s PMI data, raises the risk of a “technical” recession.   France may announce a third national lockdown on Wednesday due to a new wave of COVID-19 cases.  EURUSD is trading with a negative bias inside a 1.2060-1.2270 range.

GBPUSD mirrored EURUSD price action.  Prices are bolstered by the pace of  COVID-19 vaccinations with over 9.5% of the population receiving the first dose. (Eat your heart out Canada).  GBPUSD is also underpinned by the improved tone to global risk sentiment.  However, ongoing virus mutation concerns are capping gains.

USDJPY  traded in a tight band.  Prices recovered Asia losses in Europe, rising from a low of 103.68 to 103.88

NZDUSD traded firmer, rising from 0.7174 to 0.7215, continuing to benefit from the sentiment that the RBNZ will be less dovish than expected moving forward. AUDUSD  followed NZDUSD higher.

USDCAD retreated on the back of broadly bearish US dollar sentiment, with a rise in oil prices encouraging the slide.

The World Economic Forum starts today in Davos, Switzerland. Speakers include China’s Xi Jinping, Germany’s Angela Merkel, and Emmanueal Macron of France.

Today’s data includes Chicago Fed National Activity Index and Dallas Fed Manufacturing Business index.

USDCAD Technicals: The intraday USDCAD technicals are bearish while prices are below 1.2760, looking for a break below 1.2680 to revisit 1.2630.  A break above 1.2760 targets 1.2805 while below 1.2630 points to 1.2500.  For today USDCAD support is at 1.2680 and 1.2640.  Resistance is at 1.2730 and 1.2760.  Today’s Range 1.2670-1.2730

Chart: USDCAD 4 hours

Source:  Saxo Bank

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

Source:  Saxo Bank