The Loonie held on to yesterday’s gains in subdued overnight session. Yesterday’s Bank of Canada Business Outlook Survey painted a rosy picture for the Canadian economy. Canadian businesses are looking for higher foreign and domestic sales but are dealing with a tight labour market and capacity constraints which will lead to increased capital investments. Traders concluded that the BoC would be more hawkish at their October 25 meeting and sold USDCAD from 1.3049 to 1.2957. Prices drifted in a narrow 1.2973-97 range overnight and opened at the low.
Sterling has been lively. GBPUSD traded in a 1.3130-1.3180 range until the release of the UK employment report. Better than expected wage data lifted prices from 1.3150 to 1.3195. Things got silly in early New York trading. GBPUSD spiked above resistance in the 1.3210-20 area despite increased risks of a “no-deal” Brexit. An unnamed European Official said that UK PM May’s speech to parliament underscored how hard it would be to reach an amicable divorce.
EURUSD has been locked into a tight 1567-1.1597 band. The larger than expected Eurozone trade surplus may have offset concerns from worse than expected German and Eurozone ZEW Surveys.
USDJPY bounced off of support in the 111.70 area and opened in New York at 112.11. A slight rise in US Treasury yields contributed to the gains.
WTI oil prices are well-below their overnight peak of $72.01/barrel, opening in New York at 71.15/b. An easing in the tensions between Saudi Arabia and the US after the Saudi’s admitted “accidentally” torturing a journalist to death and predictions that the API will report a rise in US crude inventories led to the price.
Today’s US economic reports include JOLTS job openings, NAHB Housing Market Index, Industrial Production and Capacity Utilization. There aren’t any Canadian data releases.
USDCAD Technical Outlook
USDCAD is parked in the middle of its two-week range of 1.2870-1.3070 range. The downtrend rom the September 6 peak of 1.3220 is intact while prices are below 1.3050, while the uptrend from the October 1 low of 1.2790 is intact above 1.2960. A break below 1.2960 targets 1.2890 while a move above 1.3050 points to 1.3200.
Today’s Range 1.2930-1.3010