Picture: Young Frankenstein 1974

October 5, 2020

USDCAD open (6:00 am ET) 1.3266-70, Overnight Range 1.3265-1.3302

  • “Risk-on” fuels stock gains, and US dollar retreat
  • Mixed Eurozone data limits EURUSD gains
  • Brexit talks extended for another month

FX Ranges at a Glance -For September 2020

Source: IFXA Ltd/RP

FX Recap and Outlook:  President Trump is reportedly being released from the hospital today, and the news turned risk sentiment positive.  Asia and European equity markets are higher.  Oil prices bounced, and the US dollar slipped against the G-10 majors, except against JPY.

EURUSD rallied to 1.1759 from 1.1707 on the back of improved risk sentiment.  Euro-area data was mixed.  German and Eurozone Services and Composite PMI reports were better than expected, but France, Italy and Spain data slumped. Eurozone Retail Sales surged in August, rising 4.4% m/m, compared to a drop of 1.8% in July.   The retail sales gain was attributed to pent-up demand and not likely to be sustained.

GBPUSD rallied to 1.2964 from 1.2901 before easing to 1.2944 in NY trading. UK Services data was a tick better than expected.  Prices were also supported by news that the UK and EU agreed to extend Brexit talks for another month due to “sufficient progress” being made.

USDJPY firmed on the improved risk tone.  Traders ignored comments from BoJ’s Kuroda.  He said the economy is in severe condition but picking up.

AUDUSD and NZDUSD are trading near their overnight peaks.  AUDUSD traders are looking ahead to Tuesday’s RBA monetary policy statement and the Australian government budget.  The budget release may lead to a tame RBA statement and underpin prices.

Oil prices surged.

WTI climbed from $37.00 to $38.62/barrel  on the back of the weak US dollar and hopes for improved global demand.

USDCAD dipped thanks to broad US dollar losses against the G-10 majors.  Prices may have been undermined a tad by the oil price rally.

Bank of Canada governor speaks on Thursday, and Canada employment data is released Friday.

US ISM Services data is ahead, but Wall Street price action, and Trump health headlines will dictate FX direction today.

USDCAD Technicals: The intraday technicals are mildly bearish below 1.3295, looking for a test of the September uptrend line which comes into play at 1.3240.  For today, USDCAD support is at 1.32400 and 1.3210.  Resistance is at 1.3305 and 1.3330.  Today’s Range 1.3240-1.3305

Chart: USDCAD 4 hour

Source:  Saxo Bank

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

Source:  Saxo Bank