July 30, 2019

USDCAD open (6:00 am EDT) 1.3178-82          Overnight Range: 1.3162-1.3181

GBPUSD collapsed, losing 2.12% between Friday’s closing level of 1.2383 and this morning’s Asia low of 1.2120. Prime Minister Boris Johnson, Foreign Secretary Dominic Raab and MP Michael Gove comments escalated fears of a “no-deal” Brexit on October 31.  Mr Johnson said he wouldn’t meet with EU officials unless they scrapped the Irish border plan.  EU officials have repeatedly said the issue is non-negotiable.

Profit-takers and bottom fishers emerged before the European open and GBPUSD rallied from 1.2120 to 1.2188.  A break above 1.2210 would extend gains to 1.2260, but the longer-term downtrend is still intact below 1.2350.

The US dollar opened in New York on a mixed note, losing modestly against JPY and CHF while trading higher against the Queen’s head currencies. (CAD, AUD, NZD and GBP)  EUR opened unchanged.

EURUSD traded narrowly in a 1.1133-1.1148 range.  EURGBP demand offset selling pressure from mixed to soft Eurozone Confidence and Sentiment Surveys.

The Bank of Japan left interest rates unchanged but warned that downside risks due to “protectionist policies” could lead to a “preemptive” policy easing.  Data-wise, Japan unemployment rate was better than expected (2.3% vs May 2.4%) while June preliminary Industrial Production was worse than forecast.  USDJPY traded with a negative bias in a 108.56-108.94 range, weighed down in part, by softer US Treasury yields.

AUDUSD and NZDUSD continue to be pressured by expectations that the Fed will be less dovish than previously expected while the RBA and RBNZ are predicted to cut rates again.

There isn’t any news from the US/China trade talks in Shanghai.

Oil prices are steady to firm, supported by the expectations of a 0.25% Fed rate cut tomorrow, reduced US crude inventories, and Middle East tensions.

USDCAD was adrift in a narrow 1.3162-1.3180 range.  Wednesday, May Canada GDP data could lead to renewed USDCAD selling on a better than expected result.  Also, month-end portfolio rebalancing flows, tomorrow, may necessitate USDCAD selling.

There is plenty of US data on tap today, including June Personal Income and Expenditures, S&P Case-Shiller Home Price Index, Consumer Confidence and Pending Home Sales.  However, the results are unlikely to have a lasting impact on FX trading, today.

USDCAD Technical Outlook

The intraday technicals are the same as yesterday- bullish while prices are above 1.3150, and looking for a break above 1.3190 to extend gains to 1.3230. However, the downtrend line from the end of May remains intact while prices are below 1.3190. Today’s Range 1.3140-1.3220.

Chart USDCAD 4 hour