Photo: freebie photography

January 19, 2021

  • Yellen confirmation hearing today
  • German ZEW data surprises to upside
  • US dollar softer with uptick in risk sentiment

USDCAD open (6:00 am ET) 1.2724-28,  Overnight Range 1.2722-1.2755, Previous Close 1.2758

FX Ranges at a Glance:

Source: IFXA Ltd/RP

FX Recap and Outlook:  It is President Trump’s last full day in office.  Global markets seem to be pleased-Donnie, not so much.

The Wall Street Journal reports that Ms Yellen will encourage the new administration to spend.  She will say  “Economists don’t always agree, but I think there is a consensus now: Without further action, we risk a longer, more painful recession now—and long-term scarring of the economy later.”  She believes she has a dual mission: seeing America through the pandemic and rebuilding the economy, creating more prosperity for people.

It was a modest “risk-on” session overnight.  Asia equity markets were higher except for mainland China, and European bourses are also in the green. Wall Street futures are higher, and the  weaker US dollar helped to boost gold and oil prices.

EURUSD climbed from 1.2075 in Asia to 1.2137 in early NY trading. Prices may have got a bit of a lift from the easing of the Italian political drama.  Traders did not appear to be concerned with reports that Germany may extend lockdown measures to February 15. German ZEW investor confidence was stronger than expected.   For today, EURUSD technicals are bullish above 1.2050, supported by the break above 1.2090 and looking to extend gains to 1.2170. A move above 1.2170 targets 1.2280.

GBPUSD rallied from 1.3580 to 1.3626 in the face of broad US dollar weakness, despite concerns that the post-Brexit economy will be sluggish while the UK adjusts to the non-EU member world.  Traders are also ignoring rumours that strict COVI-19 measures could remain in large cities until the end of April.

USDJPY climbed to 104.08 from 103.66 on the back of higher US 10-year Treasury yields, in a risk-seeking trade environment.

AUDUSD and NZDUSD rallied.   AUDUSD technicals are bullish while trading above 0.7640, looking for a break above 0.7720 to extend gains to 0.7850.

Oil prices continue to consolidate losses from last week.  The International Energy Agency (IEA) didn’t help matters when they cut their 2021 oil demand forecast by 300,000 barrels/day.  It cut its Q1 oil demand forecast by 580,000 barrel/day.

USDCAD ignored news that Canada’s COVID-19 vaccine supply dropped by half for the next month or so, and traders continue to dismiss news that Biden will cancel the Keystone XL pipeline.  Instead, the currency road the rally bus again, tracking AUDUSD and EURUSD moves.  Canada Manufacturing Sales and Wholesale Sales data are released today.

Wall Street price action, Yellen’s confirmation hearing, and Trump hijinks will provide the entertainment today.

USDCAD Technicals:   The intraday technicals are bearish supported by the failure to break above downtrend resistance in the 1.2795-1.2805 are yesterday.  The break below 1.2750 targets 1.2705, which if broken will lead to a retest of support in the 1.2640 zone. For today, USDCAD support is at 1.2705 and 1.2670.  Resistance is at 1.2790 and 1.2810.  Today’s Range 1.2680-1.2760

Chart: USDCAD daily

  Source:  Saxo Bank

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

Source:  Saxo Bank