September 10, 2019
USDCAD Open (6:00 am EDT) 1.3175-79 Overnight Range 1.3189-1.3166
Crude oil prices are surging and giving the Loonie some support. West Texas Intermediate, the North American benchmark prices are up 10.4% since September 3, and that move contributed to USDCAD losing 1.8% in the same period. USDCAD continues to be undermined by last Friday’s US and Canadian employment reports. Soft nonfarm payrolls data solidified expectations the Fed will cut rates next week. Conversely, the Canadian data reduces the urgency for the Bank of Canada to follow the Fed.
FX traders were spinning their wheels in an uneventful overnight session. The US dollar was a tad firmer against the major G-10 currencies at the Toronto open, except against the Swiss franc.
FX Market Snapshot
Change in Currency value vs the US dollar- NY close to NY open
EURUSD traded sideways in a narrow range, albeit with a negative bias as traders await Thursdays’ European Central Bank (ECB) meeting. The fact that policymakers will announce new stimulus measures won’t surprise anyone, but the scope of the measures is the wild card. ECB President Mario Draghi said he would use all the tools at his disposal to boost European growth. He only has two meetings left in his tenure, so may be motivated to act aggressively.
GBPUSD bounced inside a 1.2308-78 range, awaiting new Brexit developments. The proroguing of UK parliament starts today and will end October 14. The MP’s passed a law to attempt to block a no-deal Brexit, but for it to be effective, the EU needs to agree to an extension.
AUDUSD chopped about in a narrow 0.6852-0.6866 band but with a modest, negative bias. Prices were undermined by weak China data which continued to warn of slowing China growth. NZDUSD traded in a similar vein, and both currency pairs opened at their overnight session lows, in Toronto.
USDJPY rallied from its 107.19 close to 119.49 in Asia mirroring US 10-year Treasury yields which rose from 1.591% to 1.634%. Both USDJPY and 10-year Treasuries are at their overnight peaks to start today’s Toronto session. USDJPY has gained 2.7% since the end of August supported by restarting of the US/China trade talks.
Today’s US and Canadian economic reports are second-tier and unlikely to have any FX impact.
USDCAD continues to consolidate losses stemming from Friday’s US and Canadian employment reports. The surprisingly strong Canadian employment data reduced the incentive for the Bank of Canada to cut interest rates at the October policy meeting, even though the Fed is widely expected to cut rates next week. The intraday and short term USDCAD technicals are bearish, following the break of support at 1.3240 and 1.3180 and are looking for further losses to 1.2950. Today’s Range: 1.3130-1.3190.
Chart: USDCAD 30 minute
Source: Saxo Bank