December 22, 2020
- Brexit negotiators trying to reel in fishing deal
- Congress passes Relief bill
- FX majors choppy and random
FX Ranges at a Glance:
Source: IFXA Ltd/RP
FX Recap and Outlook: The world hasn’t stopped turning, but FX traders have stopped caring, for the most part. GBPUSD continued to “yo-yo,” on Brexit headlines.
US Congress passed a $900 billion COVID-19 Relief bill, and a $1.4 trillion spending bill which will avoid a government shutdown until September 2021.
Asia equity markets were unimpressed with the US COVID bill news and the major indexes closed with losses, with Japan’s Nikkei 225 down 1.04%. European stock traders appeared to like the US stimulus news, and drove the major indexes higher.
GBPUSD traded in a 1.3363-1.3468 range with a lot of travel time in between. It should come as no surprise that Brexit headlines played a large role. Also, traders were concerned about the latest round of Coronavirus lockdowns, and about when France would reopen its borders to UK freight.
The UK has reportedly made some concessions on fishing, but not enough for the EU. UK Q3 GDP was a stellar 16% q/q (forecast 15.5%), but it wasn’t a factor for traders.
EURUSD was offered in Asia and dropped from 1.2249 to 1.2205. Prices rebounded in Europe and touched 1.2234 in NY. The single currency is modestly supported by the US COVID-19 Relief bill, and is getting additional support from reports EU vaccinations will start after Christmas.
USDJPY traded quietly in a 103.29-103.47 range with steady to firm Treasury yields helping to offset pressure from year-end flows.
AUDUSD and NZDUSD drifted lower as the greenback clawed back some of yesterday’s losses. Australia Retail Sales (preliminary) rose 7% in Nov m/m.
USDCAD traded at 1.2952 just before NY opened yesterday, and dropped to 1.2820 by the early afternoon. It drifted higher, reaching 1.2885 just before Europe opened, and chopped around in a narrow 1.2862-85 range until opening in NY at 1.2868. USDCAD direction is determined by broad US dollar sentiment vs the majors, but subject to random year-end flows.
US Q3 GDP (forecast 33.0% y/y) data is on tap in addition to housing starts and consumer sentiment
USDCAD Technicals: The intraday USDCAD technicals are bullish after snapping the November 1 downtrend line when prices broke above 1.2790 yesterday. However, the March downtrend is intact while prices are below 1.3105. For today, USDCAD support is at 1.2830 and 1.2800. Resistance is at 1.2890 and 1.2950. Today’s Range 1.2830-1.2890
Chart: USDCAD 4 hour
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank