November 11, 2019

USDCAD open 1.3220-24 (6:00 am EST) Overnight Range 1.3216-1.3232

It will be a subdued FX session today. Canadian  and US markets are partially closed for Remembrance Day and Veteran’s Day.  The Toronto and New York Bond markets are closed, but the major stock markets are open in both countries. FX desks will have skeleton staffs.

Positive risk sentiment took a bullet overnight, figuratively, and literally. Hong Kong police switched to live ammo and shot a protestor, raising fears of a heavier-handed China response to the unrest. Meanwhile, the adage about why one should never “ASS-U-ME” anything was proved again. Risk markets had rallied on the assumption of pending US/China tariff roll-backs. President Trump disabused them of the notion, Friday, saying “They’d like to have a rollback… not a complete rollback because they know I won’t do it,”

The US dollar inched higher in Asia but retreated in Europe, to open in New York with small gains across the G-10 spectrum.

 FX Market Snapshot Daily

Change in currency value against the US dollar from Mon. NY open to Fri. NY open 

GBPUSD soared in early Toronto trading, rising from 1.2830 to 1.2887, following an announcement by UK Brexit Party leader Nigel Farage. He said his party would not contest 317 seats in Tory ridings, to avoid Liberal Democrats from making gains, which is great news for Boris Johnson’s Conservative Party. Mixed economic data also underpinned GBPUSD. Q3 GDP rose 0.3% q/q (forecast 0.4%) a vast improvement from the -0.2% q/q result seen previously. Manufacturing and Industrial Production data were better than the August results. 

EURUSD traded in a tight range supported by a mild bid, mostly due to profit-taking, although the Spanish elections may have helped. The socialists still have the most seats but not enough for a majority. There wasn’t any Eurozone economic data, and the lack of a US market put a damper on trading enthusiasm.

 USDJPY traded with a negative bias overnight, dropping from 108.24 to 107.92. 10-year US Treasury yields bounced between 1.90% and 1.952%, but that action was overshadowed by concerns about the escalation of violence in Hong Kong and Trump’s dismissal of tariff rollbacks.

AUDUSD dropped due to the adverse risk tone, which exacerbated NZDUSD selling because of weaker than expected Electronic Retail Sales data.

USDCAD Friday’s post-Labour Force Survey gains and traded in a narrow range and was unable to break above resistance in the 1.3240 zone. The employment report was a tad weaker than suggested by the headline loss of 1,800 jobs. The loss may have been larger without the Federal election, and Scotiabank economists note weakness in hours worked. USDCAD is taking direction from EURUSD moves.

There are not any economic reports from Canada, or the US released today.

USDCAD Technical View

The intraday USDCAD technicals are bullish while prices are above 1.3180, looking for a break of resistance at 1.3240 to extend gains to 1.3290 and then 1.3350. Longer term, the downtrend from the May 30 peak of 1.3560 is intact while prices are below 1.3280. For today, USDCAD support is at 1.3210 and 1.3180. Resistance is at 1.3240 and 1.3280. today’s Range 1.3210-1.3240

Chart: USDCAD 4 hour

Source: Saxo Bank