February 4, 2021

USDCAD open (6:00 am ET) 1.2806-10,  Overnight Range 1.2779-1.2823,  Previous Close 1.2786

FX Ranges at a Glance:

Source: IFXA Ltd/RP

FX Recap and Outlook: US jobless claims dropped 33,000  to 779,000 in the week ending January 30..  FX markets did not budge on the news.

The Bank of England gave GBPUSD a lift when it left interest rates and policies unchanged.  Traders were worried  about the possibility of a negative rate announcement which took prices to an overnight low of 1.3568.  It didn’t happen.  Instead, the BoE said they would need six-months to prepare for negative interest rates.  GBPUSD soared and reached 1.3696, with some analysts forecasting that negative rates are unlikely due to expected economic benefits from vaccines.

Overnight, the US dollar caught a bid without much in the way of new fundamental support.  Traders focused on yesterday’s better-than-expected ADP employment data (actual 174,000 vs forecast 49,000), improved ISM Services PMI data, and a gaggle of Fed speakers supporting unchanged US monetary policy, and bought US dollars.

The US House approved a budget bill that lets Biden’s $1.9 trillion Relief bill pass with a simple majority rather than the customary 60%.  Nevertheless, the finished product is expected to be watered down to $1.3 trillion.

Traders are happy with the news that US coronavirus cases reported daily,  fell 16%, over the past week.  America has vaccinated 8.3%, and 20.7 million people have received one dose.  In contrast, Canada has only given one dose to just 1.2 million people.  Things are looking up for Canada.  Justin Trudeau has secured vaccines originally destined for poor, developing countries.

It’s the equivalent of stealing the poppy-fund box.

EURUSD broke below support at 1.2010 in Asia and but it ran out of steam ahead of minor support in the 1.1980 area.

The single currencies losses are due to concerns that the post-pandemic economy boom in the US will be more robust, and occur sooner than the EU recovery.   The improved odds for a US stimulus package validated those concerns.  Former ECB President “Super Mario” Draghi accepted the President’s request to attempt to form a government.  Eurozone Retail sales were higher than expected, rising 0.6% in December, compared to forecasts for a gain of 0.3%.  The EURUSD technicals are bearish. The decisive break below 1.2010 suggests further losses to 1.1870. However, the daily and 4 hour Bollinger band and RSI suggest EURUSD is oversold and due for a correction.

USDJPY continued its strengthening trend, rising from 104.99 to 105.31 due to broad US dollar strength and higher 10-year Treasury yields which touched 1.15% overnight.

AUDUSD and NZDUSD were steady but traded with a negative bias due to broad US dollar demand.  Australia’s trade surplus widened to a record $6.785 million which gave AUDUSD a bit of support.

Oil prices continue their March higher.  WTI climbed to $56.22/b from $55.80, as the combination of falling US crude inventories and Opec production cuts underpin prices.

USDCAD traded in a 1.2779-1.2808 range overnight and then rallied to 1.2823 in early NY trading.  Prices are tracking AUDUSD and EURUSD moves,

FX markets will focus on US stimulus package developments and the stock market, but trade cautiously ahead of tomorrow’s nonfarm payrolls report. (forecast 50,000)

USDCAD Technicals: The intraday USDCAD technicals are unchanged. Prices are bullish above 1.2770, looking for a break of 1.2850 to extend gains to 1.2990. For today, USDCAD support is at 1.2770 and 1.2740.  Resistance is at 1.2850 and 1.2890  Today’s Range 1.2790-1.2860

Chart: USDCAD 4 hour

Source:  Saxo Bank

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

Source:  Saxo Bank