September 11, 2020

USDCAD open (6:00 am ET) 1.3168-72, Overnight Range 1.3153-1.3193

  • GBPUSD languishes at yesterday’s low, could sink further
  • US CPI rises 0.4% m/m in August (forecast 0.3% m/m)
  • US dollar opens little changed from yesterday’s open, except for GBP

FX Ranges at a Glance

Source: IFXA Ltd/Petersraymond

FX Recap and Outlook  US August CPI was a tad higher than expected and the news gave the greenback a bit of a bid, as the increase was broad-based.  The greenback inched higher on the news.

Thursday, FX price action was wild and woolly, thanks to a somewhat tame ECB meeting, and the EU reaction to the UK’s planned Brexit withdrawal agreement amendments. The major G-10 currencies have returned close to yesterday’s opening levels, except GBPUSD.

Asia equity indexes dismissed Wall Streets equity woes.  The Nikkei 225 and Hang Seng closed higher, while Australia’s ASX finished modestly lower. European bourses flipped to positive and Wall Street futures are in the green. Gold and oil prices are flat.    The US dollar was pressured modestly by the news that the Senate Republicans were unable to pass the latest COVID-19 relief bill.

GBPUSD plunged from 1.3024 to 1.2780 yesterday, then dipped to 1.2764 overnight. Prices have since rebounded to 1.2796, most likely due to profit-taking.  The EU scoffed at  the UK’s latest withdrawal proposal, and dramatically escalated the risk of a “no-deal” Brexit.The EU claims the Internal Market Bill violates the withdrawal agreement. Cynics believe the UK antics are merely fodder for the masses designed to make the final deal easier to swallow.  UK GDP rose 6.6% m/m in July which was close to the 6.7% forecast   Industrial Production, and Manufacturing production reports were better than expected but lost in the shadow of Brexit.  GBPUSD technicals are bearish below 1.3010 looking for a break below 1.2760 to extend losses to 1.2550.

EURUSD soared, and sank yesterday, then rallied overnight, but stayed well inside its recent range, following the ECB meeting.  The ECB was not even close to being as “dovish” as expected which supported prices.  ECB President Christine Lagarde said that the economic data showed a “strong rebound,” supporting gains, but warned the “balance of risks was to the downside.”  The ECB also tweaked 2020  growth forecasts from -8.7% y/y  to -8.0% y/y.

AUDUSD and NZDUSD prices tracked broad US dollar sentiment and remained inside their recent ranges.

USDCAD failed to break above 1.3270 this week.  At the same time, it was unable to snap the uptrend line from the beginning of September.  Traders ignored the latest Bank of Canada monetary policy statement.

USDCAD direction is dictated by broad US dollar sentiment with domestic influences ignored.

USDCAD Technicals: The USDCAD are bullish inside a narrow 1.3120-1.3250 band.  A break below 1.3120 targets 1.3000, while a move above 1.3250 shifts the focus to 1.3400 . For today, USDCAD support is at 1.3120 and 1.3080.  Resistance is at 1.3210 and 1.3250. Today’s Range 1.3120-1.3220

Chart: USDCAD 4 hour

Source:  Saxo Bank

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

Source:  Saxo Bank