October 23, 2019

USDCAD open 1.3095-99 (6:00 am EDT)    Overnight Range 1.3090-1.3107

FX traders curbed their enthusiasm for riskier assets in another dull overnight session. UK Prime Minister Boris Johnson had another set-back in the Parliament which increased the risk for a Brexit delay and an election. 

FX traders bought the US dollar across the board and the greenback opened in New York with small gains.

FX Market Snapshot

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

The Brexit deadline is just eight days away, the FOMC is in seven, the ECB meets tomorrow, and actionable economic data is sparse. That is all the incentive needed to sideline trading.

USDCAD traded steadily in a tight range. Traders were unphased by Monday’s election results or Tuesday’s Bank of Canada Business Outlook Survey. (BoS) The BoS was mostly upbeat except in the oil patch. There wasn’t anything in the data to force the Bank of Canada to cut interest rates next week. Traders are also ignoring oil price movements. WTI oil prices have bounced around in a $52.00-$55.00 range for the past week. They are likely to remain a non-factor unless prices break below support in the $51.60/barrel area.   Russia’s Energy Minister said he didn’t have any information about proposals for deeper production cuts at Opec’s December meeting.

GBPUSD is trading at 1.2873 in New York,  which is about the middle of the overnight 1.2843-1.2897. The odds for a UK election this year increased after Boris Johnson threatened to trigger such an event, but the odds of a “no-deal Brexit are sharply lower.

EURUSD is marking time ahead of Thursday’s ECB monetary policy meeting. It is expected to be a non-event due to the announcements made last month and because it is Mario Draghi’s final meeting as President. EURUSD traded with a negative bias, falling from 1.1130 to 1.1117 and is trading at its overnight low.

USDJPY is a tad softer because of the negative risk sentiment and slightly lower US 10 year Treasury yields, which slipped to 1.749% from 1.791% overnight.

AUDUSD and NZDUSD inched lower. AUDUSD saw added selling pressure after a speech by RBA Assistant Governor Christopher Kent warning of possible risks from the transition from Libor.  NZDUSD tracked AUDUSD lower due to generally bullish US dollar sentiment.

Canada Wholesale Sales and US Housing Price Index data are due today, but they shouldn’t have much impact on FX. Instead, traders will take direction from Wall Street, and news about Brexit and US/China trade progress

USDCAD Technical View

The intraday USDCAD technicals are bearish with the downtrend from October 9 still intact while prices are below 1.3120.  A break above that level would lead to a test of 1.3180.  A move above 1.3240 would suggest a short term bottom is in place at 1.3060.  A break below 1.3060 targets 1.3010. and then 1.2870. For today, USDCAD support is at 1.3060 and 1.3040.   Resistance is 1.3120 and 1.3160. Today’s Range 1.3070-1.3120

Chart: USDCAD 1 hour

Source: Saxo Bank