July 22, 2019

USDCAD open (6:00 am EDT) 1.3047-50           Overnight Range: 1.3042-1.3066

Oil tanker seizures in the Strait of Hormuz, US/China trade worries, US/Turkey issues, and Hong Kong riots kept FX traders on the sidelines, overnight.  That’s not all.  GBPUSD traders are awaiting the “anointment” of Boris Johnson as UK Prime minister, on Wednesday and renewed Brexit rhetoric.  EURUSD traders are looking to Thursday’s ECB meeting.

The US dollar opened in New York on a mixed note and not far from where it closed on Friday.  The New Zealand and Canadian dollars were the only major G-10 currencies to gain while Sterling was the biggest loser.

GBPUSD is trading with a negative bias as the Tory leadership race winds down. A Boris Johnson led government risks a “no-deal” Brexit and a snap UK election.  The UK is still mulling over its response to Iran’s seizure of a British ship and wishing it was the 19th century when the ruled the waves.

EURUSD is trading at the top of its narrow 1.1209-1.1223 range.  Traders are undecided as to whether the ECB will provide new stimulus at the July 25 meeting or wait until the next one.  There wasn’t any economic data of note.

In Asia, geopolitical risks and softer US Treasury yields undermined USDJPY.  NZDUSD outperformed AUDUSD but both currency pairs traded in narrow bands.

Oil prices climbed after Iran grabbed the British tanker.  WTI rose to  $56.86/b from $55.73/barrel at Friday’s close.  However, the protracted US/China trade talks and a Goldman Sachs report of reduced global oil demand capped gains.

USDCAD could not sustain gains made after Friday’s May Retail Sales disappointed in part because poor weather may have tainted the result. (Actual -0.1% m/m result vs forecast 0.3%) The April result was revised higher.

Canada Wholesale Sales for May are due today and expected to rise by 0.5% compared to April’s 1.7% gain.  The US calendar is empty.

USDCAD Technical Outlook

USDCAD is trapped in a 1.3010-1.3100 range.  The intraday technicals show a modest bullish bias while prices are above 1.3040, looking for a break of resistance in the 1.3090-1.3100 area to extend gains to 1.3140.  A move below 1.3040 targets the major support zone in the 1.2990-1.3010 area with additional strong support lurking in the 1.2960 area.  Today’s Range 1.3010-1.3090.

Chart: USDCAD 1 hour