August 19, 2019
USDCAD Open (6:00 am EDT) 1.3260-63 Overnight Range 1.3259-1.3277
Global risk sentiment revived overnight, boosting Asia and European equity indices, weakening safe-haven currencies and gold prices while underpinning crude demand. China’s Shanghai Shenzhen Index and Hong Kong’s Hang Seng Index surged, both rising 2.17%. Demand was bolstered by the People’s Bank of China (PBoC) reforming the Loan Benchmark Rate. (LBR) CNBC wrote that some analysts said the move was a rate cut.
Change in currency value vs US dollar Friday NY Close-Monday open
Eurozone July CPI data was weaker than expected. (Actual 1.0% y/y vs forecast 1.1% and June 1.3%) EURUSD ticked higher, but intraday technicals are bearish while prices are below 1.1160.
FX markets will get a healthy dose of Fed-speak this week. Fed Chair Jerome Powell headlines with a speech at the Federal Reserve Bank of Kansas City’s annual Jackson Hole Symposium, on August 23. This year’s theme is “Challenges for Monetary Policy.”
Traders will study the FOMC minutes, released Wednesday, to see if Mr Powell’s remarks are more dovish or less dovish than the tone in the minutes.
GBPUSD touched 1.2171 in Asia but sold in Europe, and it opened in New York at the session low. The currency pair is supported by bullish intraday technicals in a short GBPUSD environment. Prime Minister Boris Johnson is travelling to Germany and France which could lead to some conciliatory noises over Brexit, supporting GBPUSD. However, the downtrend is still intact while prices are below 1.2320.
USDJPY firmed, supported by the rebound in US 10-year Treasury yields which rose from 1.572% to 1.613% in early New York trading. USDJPY is trading near session highs of 106.57.
AUDUSD outperformed NZDUSD. Both currency pairs did not get much of a boost from the better risk sentiment tone due to dovish central bank monetary policies.
WTI oil prices are in a mild uptrend from August 7 while prices are above $54.60/barrel. Prices continue to be supported by Middle East tensions and by another drone attack on a Saudi oil field.
USDCAD opened unchanged from Friday’s close. Sentiment is modestly bearish following Friday’s mixed US housing and Building permits and soft Michigan Consumer Sentiment data. This week CPI (Wednesday) and Retail Sales (Friday) report are due. Stronger than expected data would lead to further selling as it would make it harder for the BoC to justify cutting interest rates next month.
There are any US or Canadian economic reports today. However, US equity futures are pointing to triple-digit gains in the DJIA to start the session, which should support risk sentiment
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish while prices are below 1.3270, looking for a break of minor support at 1.3230 to extend losses to 1.3140, representing the 61.8% Fibonacci retracement level of the Jul 22-August 7 range of 1.3015-1.3340. For today, USDCAD support is at 1.3230 and 1.3210. Resistance is at 1.3280 and 1.3310. Today’s Range 1.3220-1.3280
Chart: USDCAD 4 hour
Source: Saxo Bank