August 20, 2019
USDCAD Open (6:00 am EDT) 1.3325-29 Overnight Range 1.3311-1.3329
The Canadian dollar dropped steadily yesterday, and consolidated the losses in a narrow range, overnight. EUR, NZD, and CAD started today’s session, virtually unchanged from yesterday’s close while JPY, CHF and AUD recorded small gains. For the most part, FX action was uneventful.
There is a lot of event risk this week, including data, FOMC minutes and sound bites/headlines from the G-7 meeting on the weekend. President Trump has hogged center stage at the past two meetings, so it’s not a stretch to suggest he will do the same at this one.
The US dollar got a bit of a lift from reports that the Trump administration was considering payroll tax cuts to avoid a recession. The White House denied the stories. Yesterday, Trump’s tweets complaining about the value of the dollar and calling for a 100 point rate cut, were largely ignored.
EURUSD is pressing support in the 1.1080 area, undermined by the risk of another Italian election and by broad US dollar demand.
GBPUSD slid at the European open on “no-deal” Brexit fears. Prime Minister Johnson issued a four-page letter insisting the Irish -backstop be removed which the EU won’t tolerate.
USDJPY slid after US Treasury yields retreated from their overnight peak. 10-year Treasury yields dropped from 1.608% to 1.571% in early New York trading.
AUDUSD caught a bit of a bid after the release of the Reserve Bank of Australia policy meeting minutes of August 6. They suggested the RBA would leave rates unchanged for the foreseeable future.
Oil prices continued to drift higher supported by talk of US fiscal stimulus, and concerns about supply disruption from the Middle East. WTI oil rose from $55.99 to $56.63/b before slipping to $56.33 at the open.
Canadian Manufacturing Shipments data for June are due today and expected to decline 1.7% compared to a 1.6% rise in May.
FX Market Snapshot
Change in Currency value vs the US dollar- NY close to NY open
USDCAD Technical Outlook
The USDCAD technicals are bullish while prices are above 1.3220, looking for a break of triple-top resistance at 1.3340 to extend gains to 1.3550. For today, USDCAD support is at 1.3305 and 1.3270. Resistance is at 1.3340 and 1.3380. Today’s Range 1.3305-1.3380
Chart: USDCAD DAILY
Source: Saxo Bank