October 29, 2019

USDCAD open 1.3061-64 (6:00 am EDT)    Overnight Range 1.3053-1.3062

FX markets are going nowhere, fast. The UK parliament’s election vote results and a speech by RBA Governor were the highlights of the Asia session.  European traders bought US dollars on anticipation the Fed will cut rates and then suggest they are done, for the time being.

The US dollar opened in New York with small gains across the major G-10 spectrum accept against AUD.  Those gains were mostly unwound in early trading today and the greenback is mixed to flat.

FX Market Snapshot

Change in currency value against the US dollar from New York close to New York open 

The UK is heading to the polls if Boris Johnson gets his way and it could be December 11 or 12. Jeremy Corbyn’s Labour party will not oppose the vote. The news lifted GBPUSD which climbed to  1.2857 from 1.2818 in early New York trading. . UK domestic economic data was not a factor.

EURUSD inched lower, crawling down from 1.1101 to 1.1075 on expectations of less-dovish-than expected FOMC outcome on Wednesday. A 3.4% increase in German August Retail Sales was the highlight of a series of second-tier Eurozone economic reports which were ignored by traders.

USDJPY opened virtually unchanged in New York but was unable to sustain gains above 109.00. The intraday uptrend from the beginning of October remains intact while prices are above 108.60. The drop in prices coincided with a small retreat in 10-year US Treasury yields which dipped to 1.831% from 1.858%.

AUDUSD and NZDUSD were a tad perky following President Trump’s comments on Monday. Mr Trump said “We are looking probably to be ahead of schedule to sign a very big portion of the China deal, and we’ll call it phase one but it’s a very big portion.” AUDUSD got an added lift when RBA Governor Phillip Lowe suggested a negative OCR was unlikely.

Oil prices slipped from yesterday’s peak, in part due to broad US dollar gains. The Saudi Arabia Energy Minister reportedly told the Nigerian oil minister that the Kingdome would be ready to make deeper production cuts to help support the crude market. Those comments did not have any impact on prices which dropped from $55.84/barrel to $55.22/b.

USDCAD was close to inert. It traded in a narrow 0.007 point range ahead of Wednesday’s Bank of Canada policy meeting. The improved tone to the US/China trade talks diminishes one of the BoC’s significant risks to the domestic economy, reducing the need for rate cuts or a dovish monetary policy.  The prospect of steady Canadian rates and bearish technicals undermines USDCAD.

Today’s US economic reports include Consumer Confidence, and Case Shiller Home Price index. The Canadian calendar is empty.

USDCAD Technical View

he intraday USDCAD technicals are unchanged.  They are bearish while trading below 1.3105, looking for support in the 1.3040 area to give-way and target the 1.2990 1.3010 level.  A break above 1.3110 would target 1.3180. For today, USDCAD support is at 1.3040 and 1.3010.   Resistance is 1.3090 and 1.3110. Today’s Range 1.3040-1.3090

Chart: USDCAD 4 hour

Source: Saxo Bank