December 15, 2020
- FX flits between risk-off and risk-on
- It’s official-Electoral College says Biden’s the man
- US dollar mixed in thin markets.
FX Ranges at a Glance:
Source: IFXA Ltd/RP
FX Recap and Outlook: The USD dollar is trading with a mixed tone as FX liquidity dissipates. Traders are becoming more concerned with the tightened COVID-19 restrictions across large parts of Europe and the UK, even as vaccines are made available.
The US Electoral College confirmed Joe Biden as the winner of the presidential election, even as Trump still rails about fraud and rigged results.
EURUSD traded with a modest bid tone while bouncing in a 1.2132-1.2163 range, with prices supported by positive sentiment on the Biden news. However, concerns about the current COVID-19 outbreaks are weighing on prices as is EURGBP selling, which has driven the single currency to just above its overnight low. EURUSD technicals are bullish but failure to take out resistance at 1.2180 risks a retest of support at 1.2040.
GBPUSD continues to be bid on hopes for a Brexit deal, but prices remain well-below yesterday’s peak level. The ubiquitous “sources” said the EU signalled movement, while UK officials said talks were “difficult.” UK employment data was mixed. GBPUSD traded in a 1.3282-1.3347 range overnight, then climbed to 1.3385 in NY.
USDJPY is trading at the bottom of its 10.92-104.14 range, weighed down by softer US Treasury yields, bearish technicals, and ever-so-modest safe-haven demand for yen.
AUDUSD and NZDUSD couldn’t get any traction from the better than expected Chinese data. Instead, prices consolidated recent gains. The minutes from the December RBA meeting did not offer any new monetary policy insight and were ignored by traders. China is reportedly using trade to express its displeasure at the Australian government. The Global Times said China is restricting imports of Australia coal in favour of Mongolia, Indonesia, and Russia.
Oil prices are steady but off their best levels, despite the IEA warning that the global glut will last throughout 2021.
USDCAD broke support at 1.2730 yesterday and appeared to be heading to 1.2660. It didn’t. Buyers emerged as oil prices slid, and commodity prices dropped. However, the price action is just noise in the context of bearish technicals and expectations for broad US dollar weakness in 2021.
Canada November Housing Starts were better than expected at 246,000, while Mnaufuacturing Shipments were lower than forecast. The results did not have any impact on USDCAD.
Bank of Canada Governor Tiff Macklem addresses the Vancouver Board of Trade via video conference today at 11:30 PT.
USDCAD Technicals: The USDCAD technicals are bearish below 1.2860, a level guarded by triple-top resistance at 1.2830, looking for a decisive break below 1.2730 to lead to a test of 1.2660, then 1.2500. For today, USDCAD support is at 1.2730 and 1.2700. Resistance is at 1.2770 and 1.2790. Today’s Range 1.2720-1.2780
Chart: USDCAD daily
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank