November 6, 2019
USDCAD open 1.3159-63 (6:00 am EST) Overnight Range 1.3147-1.3168
The minor risk rally, sparked by apparent progress in US/China trade talks, stalled yesterday and failed to re-ignite overnight. On Tuesday, US ISM non-manufacturing PMI rebounded to 54.7 from 52.6 in September. The results reduced the risk that the Fed would need to reduce US interest rates further, which boosted the greenback.
The US dollar traded sluggishly and opened flat to slightly slower.
FX Market Snapshot Daily
Change in currency value against the US dollar from NY close to NY open
EURUSD traded sideways in Asia and firmed in Europe, rising from 1.1068 to 1.1092, following perky economic data. Eurozone September Retail Sales rose 3.1% y/y, beating the forecast for a 2.5% rise. Even better, the September results were revised higher. Markit Services and Composite PMI data was better than expected as were German Factory orders and Composite PMI. However, the intraday technicals are still bearish following Monday’s break below the October uptrend line at 1.1120. Traders are looking for further losses to 1.0990.
GBPUSD bounced from yesterday’s 1.2860 low but the rally stalled above 1.2900. The UK election should limit the trading range until the next Brexit countdown starts.
USDJPY consolidated yesterday’s gains in a 108.91-109.17 range with prices propped up by firm Treasury yields and the release of dovish Bank of Japan policy meeting minutes. The BoJ minutes showed that board members considered adding more monetary stimulus.
NZDUSD shrugged off a mixed employment report to post a tiny gain at today’s New York open compared to Tuesday’s close, but it’s mid-October rally is under threat. A break below 0.6350 targets a retest of 0.6290. AUDUSD treated as the euphoria of a US/China trade deal faded.
Crude oil prices are choppy in a $56.77- $57.20/barrel range. Prices are supported by hopes of increased demand from a China/US trade deal, yesterday’s API .report showing a rise in US crude stocks, and reports that Saudi Arabia may ask for additional production cuts.
USDCAD traded at the whim of broad US dollar sentiment and getting only minimal support from firmer oil prices. Traders are cautious about the Bank of Canada cutting rates, just as the Fed shifts monetary policy into park.
Canada’s Ivey PMI index data is due today. Although many economists dismiss the report, significant deviations from the previous result cause short-lived volatility in USDCAD.
There isn’t any US data of note on tap, today.
USDCAD Technical View
The intraday USDCAD technicals bullish, looking for a break above 1.3180 to extend gains to 1.3250. A break of 1.3120 targets 1.3040. However, the downtrend line from October 10 contained gains yesterday, and price action below the 100 day moving average of 1.3193 suggests the short term (less than a week) outlook is still bearish. For today, USDCAD support is at 1.3120 and 1.3090. Resistance is 1.3190 and 1.3220. Today’s Range 1.3110-1.3190
Chart: USDCAD 1 day
Source: Saxo Bank
