November 29, 2019

USDCAD open 1.3288-92 (6:00 am EST)    Overnight range 1.3281-1.3307

Canada September GDP rose 0.1% m/m, as expected. The Raw Material Price Index fell 1.9% m/m (forecast 1.2%) and Industrial Prices rose 0.1% (forecast 0%).  The news had little impact on USDCAD trading.  However, portfolio rebalancing flows could undermine USDCAD in the run-up to 11:00 am EST or 8:00 am PST, if rumours of USDCAD selling prove true.

 In Europe, a slew of Eurozone, euro area, and UK data releases failed spark much excitement among FX traders, who appeared more interested in Black Friday Sales.  The major currency pairs showed little reaction. Sterling was the exception.

FX trading ranges have been pitiful for the past week, but the US dollar is closing out November with solid gains.  The Australian dollar was the weakest major G-10 currency while the New Zealand dollar was the only one to post a gain.

FX Market Snapshot

Change in currency value against the US dollar from Oct. 31 NY close to Nov. 29 NY  open

Source:  Saxo Bank/IFXA

News of President Trump’s visit to Afghanistan and talk of peace talks with the Taliban distracted, but did not impact FX trading.

Eurozone November inflation data surprised to the upside, rising 1.0% y/y (forecast 0.9%, October 0.7%) and the unemployment rate dropped to 7.5% from 7.6%. EURUSD barely budged as the result is well below the ECB target.  EURUSD is still suffering because of contrasting ECB and Fed monetary policy.

GBPUSD dropped from 1.2922 to 1.2881, entirely erasing the pop that occurred after yesterday’s YouGov poll predicted a 68 seat Conservative majority. A dose of profit-taking helped the slide. UK data was a “non-event.” Prime Minister Boris Johnson suggested that President Trump was a “loving friend” and then asked him not to get involved in the election, which is akin to waving a red cape a bull.

Mixed Japanese economic data and comments from Bank of Japan officials didn’t do anything to knock USDJPY from hovering near this weeks peak, which was last seen in May.

AUDUSD and NZDUSD trade sideways in narrow ranges. AUDUSD traders are looking ahead to the December 3 RBA monetary policy meeting.  Most analysts believe rates will be left unchanged.

US bond markets close early, and there isn’t any US data on tap.

USDCAD Technical View

The intraday USDCAD technicals turned bearish below `1.3310, targeting support at 1.3250. Prices are coiling for a breakout.  Above 1.3310 targets 1.3410 while a move below 1.3280 suggests further losses to 1.3190.  The uptrend from November 19, which guards another uptrend line from Oct 30 and price action above the 200 day moving average at 1.3278 suggests the risk is for a topside move.  For today, USDCAD support is at 1.3270 and 1.3210.  Resistance is at 1.3310 and 1.3350.  Today’s Range 1.3240 1.3340

Chart:  USDCAD  4 hour

Source: Saxo Bank