August 22, 2019
USDCAD Open (6:00 am EDT) 1.3287-91 Overnight Range 1.3285-1.3313
The US dollar closed with tiny gains after the release of the FOMC minutes, yesterday. The minutes repeated Fed Chair Powell’s mantra that the July 31 decision to cut US interest rates was merely a “mid-cycle adjustment.” The Committee was not united. A couple of participants wanted deeper cuts while two participants voted against lowering rates.
President Trump was tweeting his opinions before the minutes were released. He said: “Doing great with China and other Trade Deals. The only problem we have is Jay Powell and the Fed. He’s like a golfer who can’t putt, has no touch. Big US growth if he does the right thing, BIG CUT – but don’t count on him! So far he has called it wrong, and only let us down…. .We are competing with many countries that have a far lower interest rate, and we should be lower than them. Yesterday, “highest Dollar in U.S.History.” No inflation. Wake up Federal Reserve. Such growth potential, almost like never before!”
Once again, markets ignored the tweets.
In Asia, the major equity indices closed with tiny gains and the antipodean currencies were sold. Australia Manufacturing PMI beat forecasts but the gains were not sustained. AUDUSD fell from 0.6786 to 0.6760. NZDUSD dropped on the back of the FOMC minutes and is flirting with key technical support at 0.6370 which if decisively broken suggests further losses to 0.6240.
USDJPY chopped about with a negative bias in a 106.30-64 range. Prices continued to track US Treasury yield movements. The FOMC minutes said the Fed concern about downside risks to the economy had eased, suggesting a less aggressive monetary policy outlook, which weighed on prices.
EURUSD spiked to 1.1112 from 1.1076 after German, and Eurozone preliminary PMI reports were better than expected. German August Manufacturing PMI was 43.6 compared to 43.2 last month while Eurozone PMI was 53.4. (forecast 53.0)
GBPUSD is not getting much price action from Prime Minister Johnson’s meetings with Germany’s Angela Merkel or French President Emmanuel Macron. Prices are trading in New York at the lower end of the 1.2110-1.2153 range.
Oil prices are a tad lower. Opec reported its global market share is down to 30%. Traders are concerned that the reduced market share may raise questions in the Cartel, about the effectiveness of supply cuts. WTI dropped from $56.47 to $55.95 despite yesterday’s EIA report that US crude inventories fell by 2.7 million barrels.
USDCAD dropped to 1.3260 from 1.3300 after better than expected Canadian CPI data yesterday. The move didn’t last. USDCAD recouped all of the losses by the end of the day on the back of broad US dollar demand. The rally ran out of steam overnight, and the currency pair consolidated its losses in a 1.3285-1.3313 range. Traders are awaiting Fed Chair Powell’s speech tomorrow and Canadian retail sales data.
Today’s US data calendar is light with just the weekly Jobless claims report and the usually ignored Markit Manufacturing PMI data.
FX Market Snapshot
Change in Currency value vs the US dollar- NY close to NY open
The USDCAD technicals are bullish while prices are above 1.3260, looking for a break above minor resistance at 1.3310 to re-target 1.3340. A decisive break above 1.3340 opens the door to further gains to 1.3460. For today, USDCAD support is at 1.3260 and 1.3210. Resistance is at 1.3310 and 1.3340.
Today’s Range 1.3260-1.3340
Chart: USDCAD 1 hour
Source: Saxo Bank