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December 9, 2020

USDCAD open (6:00 am ET) 1.2785-89,  Overnight Range 1.2776-1.2820

  • Positive Brexit talks sends GBPUSD soaring
  • BoC statement expected to be close to unchanged
  • US dollar sinks on vaccine, and US stimulus hopes

FX Ranges at a Glance:  

Source: IFXA Ltd/RP

FX Recap and Outlook: “It is déjà vu all over again”   Yogi Berra and FX traders understand.  The US dollar is under pressure because of vaccine news, Brexit hopes, and US stimulus talks.  Yet, nothing has been resolved.

Nevertheless, Asia equity indexes (except China) climbed as did those in Europe. US equity futures are flat, gold is down 0.55% and WTI oil is up 0.42%, as of 5:30 am PT.

GBPUSD was punted through the uprights after EU and UK officials made noises about “positive developments.” Prices climbed to 1.3462 which is where it sits in early NY trading.  There are rumours that the UK will make concessions on fishing, but German Chancellor Angela Merkel said the biggest obstacle is future regulatory issues. (level playing field).  Prime Minister Boris Johnson and EU Commission President Ursula von der Leyden will discuss matters over dinner today.

EURUSD rallied from 1.2102  in Asia to 1.2146 in Europe.  It has since retraced the move and is trading at 1.2150 in NY.  US stimulus talks, expectations the EU Commission signs off on the €750 billion COVID-19 support package and, Brexit talks, underpin the currency pair. Also, EURUSD technicals are bullish above 1.2050.

USDJPY traded quietly in a 104.06-104.24 range.  Prices are underpinned by steady to firm US Treasury yields but trapped in a 103.65-105.80 range.

AUDUSD soared to 0.7479 from 0.7406, powered by better than expected Westpac Consumer Confidence data (actual 4.1% vs previous 2.5%), and improved global risk sentiment.  A break above 0.7490 will lead to a test of resistance at 0.7660.

The data cupboards are empty in the US and Canada, leaving FX direction to US stimulus news and Brexit headlines.

USDCAD gave back yesterday afternoon’s gains and dropped steadily overnight. The catalyst was broad-based US dollar selling after reports of another US COVID-19 Relief package proposal.  USDCAD prices dropped in tandem with AUDUSD and NZDUSD gains.  Today’s Bank of Canada monetary policy statement will not be a factor for FX traders.   They are widely expected to leave rates and policy unchanged.  There isn’t even a press conference.  USDCAD direction continues to be dictated by US dollar sentiment, which at the moment, is very bearish due to vaccine-fueled hopes for a global economic boom in 2021.  However, FX liquidity is slowly evaporating into the holiday season and year end.  However, USDCAD tends to rally in December, due to one-off year-end trades.

USDCAD Technicals:   The intraday USDCAD technicals modestly bearish inside a narrow 1.2765-1.2830 band.  A break above the top targets 1.2870 while a move below 1.2765 targets 1.2730.  For today, USDCAD support is at 1.2770 and 1.2740.  Resistance is at 1.2820 and 1.2860.  Today’s Range 1.2770-1.2830

Chart: USDCAD hourly

 Source:  Saxo Bank

FX open (6:00 am EDT) High, Low, and previous close

Source:  Saxo Bank