Photo:  Wikimedia commons  Photo Samuel Blanc

September 1, 2020

USDCAD Open (6:00 am) 1.3008-12,  Overnight Range 1.2996-1.3045

  • US dollar lower in part due to lingering month-end selling
  • RBA leaves rates unchanged at 0.25%, as expected
  • US dollar opens lower led by 0.60% jump in GBP

FX Recap and outlook New month, same story.  The Fed is ultra-dovish, the fall-out from the pandemic, and election distractions will leave US economic growth lagging that of the Eurozone. 

EURUSD came within spitting distance of the psychologically important 1.2000 level then backed off, regrouping for another assault.  German and Eurozone data was “meh.” Germany unemployment rose 45,000 in August while the Eurozone saw a tiny increase in the unemployment rate (actual 7.9% vs July 7.7%.  Traders didn’t care, and EURUSD stayed bid in a 1.1935-1.1996 range.

GBPUSD rallied on the back of lingering month-end GBP demand, and steady Manufacturing PMI data.

The short term technicals are bullish looking for further gains to 1.3530 while prices are above 1.3320.

USDJPY dropped in Asia, falling from 106.02 to 105.60, then clawed back some of the losses in Europe. Traders continue to digest the impact of Prime Minister Abe’s resignation, elevated US/China tensions, and US Treasury yields.

AUDUSD and NZDUSD rallied alongside widespread bearish USD dollar sentiment.  AUDUSD got an added boost when the RBA announced it increased the size of its term lending facility.

USDCAD is probing support in the 1.2987-1.3000 area, with an eye on testing 1.2950. The 1.2987 level means 77 US cents equals 1 Canadian dollar.  The USDCAD retreat is all due to broad US dollar weakness, and nothing to do with domestic issues.  A weak US economy means a weak Canadian economy. Another factor contributing to USDCAD weakness is traders unwinding long USDCAD positions.  Beware of a sharp bounce to 1.3200 as  Bollinger Band and RSI’s on daily, and 4-hour charts are at extreme oversold levels.

US ISM Manufacturing PMI is expected at 54.5.

USDCAD Technicals:  The intraday technicals are bearish below 1.3030 looking for a break below the 1.2987-90 area to extend losses to 1.2950.  A break above 1.3030 targets 1.3130.  For today, USDCAD support is at 1.2990 and 1.2950.  Resistance is at 1.3030 and 1.3080  today’s Range 1.2990-1.3060

Chart: USDCAD  daily

Source:  Saxo Bank

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

Source:  Saxo Bank