June 27, 2019

USDCAD Open (6:00 am EDT) 1.3124-27      Overnight Range 1.3119-1.3135

The first dump of US economic reports had mixed results. US Q1 GDP increased at 3.1% y/y which is the same as the previous estimate.  Core PCE was a notch higher at 1.2% from 1.0% while Initial Jobless claims were higher than expected, rising 227,000 compared to forecasts for a 220,000 increase. The US dollar response was muted.

Elsewhere, GBPUSD is firmer, in part because on the back of a casual comment by Boris Johnson saying the odds of a no-deal Brexit were a million to one. The day before he said the UK would leave the EU on October 31, “come what may, do or die.” GBPUSD climbed from 1.2671 to 1.2723on the back of EURGBP selling and month end GBPUSD demand by portfolio managers.

EURUSD chopped about in a 1.1348-1.1380 range. Selling pressures from weaker than expected Eurozone data were offset by US dollar selling on US/China trade talk optimism and US dollar month-end selling pressure. Eurozone June Business Climate, (Actual 0.17) Industrial Confidence, (Actual -5.6) Economic Sentiment Indicator, (Actual 103.3) and Services Sentiment (Actual 11.0) were below forecasts.

USDJPY rallied from 107.66 to 108.15 due to a combination off dovish comments from a Bank of Japan official calling for more easing, trade talk optimism, and higher US Treasury yields.

The improvement in risk appetite coinciding with news that Trump, and Jinping are meeting on Saturday, lifted AUDUSD and NZDUSD, although both currency pairs traded in narrow ranges.

USDCAD broke below support at 1.3150 yesterday and consolidated those losses in a narrow 1.3120-35 range overnight.  Prices are weighed down by month-end US selling pressures, high oil prices, and improving economic data. Traders are looking ahead to Friday’s April GDP data (forecast 0.1% vs 0.5% in March) and the Bank of Canada Business Outlook Survey. The increased trade tensions in May and at the beginning of the month could give the BOS a negative spin and limit USDCAD downside.

The G-20 meeting kicks off in Osaka, Japan today and with it, hopes for renewed US/China trade talks. 

USDCAD Technical Outlook

The intraday USDCAD technicals are bearish while trading below 1.3180, looking for a break of support at 1.3120 to extend losses to 1.2970 and then 1.2930.  A break above 1.3170 would target 1.3240 and then 1.3340.  For today, USDCAD support is at 1.3120 and 1.3090.  Resistance is at 1.3150 and 1.3180.Today’s Range 1.3105-1.3160

Chart: USDCAD  30 minute