August 16, 2019
USDCAD Open (6:00 am EDT) 1.3291-94 Overnight Range 1.3291-1.3323
The US dollar was in demand overnight. Only CAD and GBP managed to post gains while AUD is unchanged compared to Thursday’s close. The 2-yr/10-yr US yield curve is no longer inverted, which eased recession fears. There weren’t any top-tier economic reports released overnight, and the major equity indices were in the green as are New York equity futures.
Today’s US Building Permits and Housing Starts data barely caused a ripple in New York FX markets. The data was mixed with Building Permits rising more than expected and Housing starts missing the forecasts.
EURUSD traded sideways in Asia, but sellers emerged in Europe and drove the single currency from 1.1111 to 1.1082 in New York trading. Yesterday’s Wall Street Journal article quoted ECB official Olli Rehn suggesting next month’s stimulus package could surpass expectations. The intraday technicals are bearish looking for a decisive break of 1.1180 to extend losses to 1.0450.
GBPUSD continued to rally on fears (hopes) that the Labor Party would garner enough support to prevent Boris Johnson taking the UK out of the EU on October 31. GBPUSD is just below the top of its 1.2079-1.2172 overnight range. Traders ignored a major outage on the London stock exchange, which has since been rectified.
USDJPY continued to grind higher from yesterday’s 105.71 low and touched 106.48 before easing to 106.38 in New York. Higher US Treasury yields supported the gains. AUDUSD and NZDUSD traded quietly in narrow ranges.
USDCAD continues to track broad dollar moves. The strength of the domestic economy and relatively firm crude prices act as a drag against rallies from global risk aversion sentiment. Nevertheless, the long-term USDCAD trend is higher while prices are above 1.2970.
FX Market Snapshot
Change in Currency value vs the US dollar- NY close to NY open
USDCAD Technical Outlook
The intraday USDCAD technicals are modestly bearish while prices are below 1.3310 but need a decisive break of 1.3280 to extend losses to 1.3210 and then 1.3160. Longer term, the uptrend line from July 21 is intact above 1.3210 while the downtrend from June comes into play at 1.3340, which is also a triple top on the daily chart. A break above 1.3340 targets 1.3560 and then 1.3660. For today, USDCAD support is at 1.3280 and 1.3240. Resistance is at 1.3310 and 1.3340. Today’s Range 1.3280-1.3340
Chart: USDCAD daily
Source: Saxo Bank