August 9, 2019

USDCAD Open (6:00 am EDT) 1.3287-90   Overnight Range  1.3274-1.3312

FX markets were subdued even though the Peoples Bank of China (PBoC) fixed USDCNY at 7.0039. At the beginning of the week, traders were in a tizzy when USDCNY first popped through 7.000 even though the official fixing level was below that psychologically important level. Today, not so much. There was a whiff of positive risk sentiment wafting in the air because the Fix level was lower than what some had expected.

The US dollar was a tad softer against all the G-10 majors when it opened in New York today. AUDUSD was the biggest gainer, rising 0.37% on the back of better than expected China trade data. Chinese exports rose 3.7% y/y in July(forecast -2.0%) while imports shrank 5.6% y/y (forecast -8.3%) NZDUSD ticked higher alongside Aussie.

USDJPY traded with a negative bias in a 106.00-29 range and opened near the bottom of that range. Prices are weighed down by lingering safe-haven demand and soft US Treasury yields.

EURUSD traded with a small bid inside a 1.1200-27 band, garnering a little support from risk aversion fears. Gains were capped by a somewhat downer ECB Economic bulletin.  It noted, “prolonged presence of uncertainties, related to geopolitical factors, the rising threat of protectionism and vulnerabilities in emerging markets, is dampening economic sentiment, notably in the manufacturing sector.” In addition, EURUSD technicals are bearish while prices are below the 1.1290-1.1310 area.

GBPUSD drifted higher, rising from 1.2141 to 1.2181, until the early morning in London. Brexit and election talk served to limit gains. Traders are looking ahead to a slew of economic reports on Friday which include UK GDP, Manufacturing PMI and Trade.

WTI oil prices rebounded from yesterday’s low of $50.67/barrel and touched $52.81/b overnight. Prices were supported by reports Saudi Arabia contacted other Opec members to discuss shoring up prices.

USDCAD touched 1.3340 yesterday, after weak Ivey PMI data. Improving risk sentiment, sparked by a rebound on Wall Street, and profit-taking dropped prices to 1.3274 overnight. Canada employment data is due tomorrow and expected to show a gain of 12,500 jobs. Better than expected data should support the Bank of Canada keeping monetary policy on hold.

Today’s data includes US Jobless Claims and Wholesale Inventories. The Canada Housing Price Index is on tap.

USDCAD Technical Outlook

The intraday USDCAD technicals are bullish while prices are above 1.3250, looking for a break of minor resistance at 1.3340 to extend gains to 1.3390 and then 1.3430.   The uptrend from the middle of July is intact while prices are above 1.3170.  For today, USDCAD support is at 1.3270 and 1.3250.  Resistance is at 1.3340 and 1.3380.  today’s Range 1.3270-1.3330

Chart: USDCAD  4 hour

Source:  Saxo Bank