October 18, 2019

USDCAD open 1.3135-39 (6:00 am EDT)     Overnight Range 1.3133-1.3142

Weaker than expected China Q3 GDP data today, and Saturday’s UK Parliament vote on Prime Minister Boris Johnson’s last-minute Brexit deal, combined to suck the life-blood out of FX markets overnight.

The US dollar is poised to close the week with losses across the board (except against the Japanese yen) since last Friday. However, FX action was somewhat subdued overnight, and the greenback is opening close to unchanged against its major currency peers.

FX Market Snapshot

Change in currency value against the US dollar from New York close to New York open 

Once again, GBPUSD was the most active. Prices dipped to 1.2841, rose to 1.2919 and then it opened in New York, unchanged from the close. Reports suggest there is a 50/50 chance that Mr Johnson’s Brexit deal succeeds. A deal could extend GBPUSD gains to 1.3237 which is the 50% Fibonacci retracement level of the post-Brexit referendum vote. Failure argues for a drop to 1.2600.

EURUSD flatlined as traders awaited further developments from the UK. There wasn’t any actionable Eurozone data. 

The Turkish Lira (USDTRY) had a lively 24 hours, rising to 5.9288 yesterday and the hitting 5.7590 this morning. The threat of major US sanctions sent USDTRY soaring while a US-brokered cease-fire drove prices lower.

USDJPY stagnated in a 108.53-108.71 band.  A rise in 10-year US Treasury yields from 1.733% to 1.764%, underpinned prices. 

China Q3 GDP rose 6.0% q/q, a tick below the 6.1% predicted, but a 27 year low. The results were not a surprise as analysts and Chinese officials have been warning that the economy was slowing. Still, the results were enough to give AUDUSD and NZDUSD a lift.

Oil prices recovered losses following yesterday’s EIA weekly crude oil data which showed US inventories rising 9.0 million barrels. Broad US dollar weakness, reports of increased crude demand from China, and hopes for more progress in the US/China trade talks lifted prices from $52.85/barrel yesterday to $54.43 in early New York trading today.

USDCAD is trying to chop through support in the 1.3130-40 zone. It continues to be pressured by external developments alongside mostly positive domestic economic data. Monday’s Canadian election shouldn’t have any bearing on USDCAD trading. 

The Canadian and US economic calendars are empty.

USDCAD Technical View

The Canadian and US economic calendars are empt The intraday USDCAD technicals are bearish below 1.3180 looking for test of the 2017 uptrend line of 1.3080.  A decisive break of the 1.3060-80 zone would warn of further losses to 1.2870. A break above 1.3180 targets 1.3240.  For today, USDCAD support is at 1.3030 and 1.3005.  Resistance is 1.3180 and 1.3210. Today’s Range 1.3120-70

Chart: USDCAD daily

Source: Saxo Bank