March 10, 2020
USDCAD open (6:00 am EST) 1.3667-71 Overnight Range 1.3611-1.3701
Chart: Currency gain/loss (%) against the US dollar from NY close to NY open (6:00 EST)
Source: Saxo Bank/IFXA
.FX Recap and outlook Bottom-fishers reeled in intraday profits in all asset classes following signs China was recovering from the COVID-19 outbreak. They closed all the temporary hospitals in Wuhan, and President Jinping dropped by for a visit. Punters were also encouraged by President Trump’s stimulus plan, which included a payroll tax cut
Oil prices climbed with the hopes that the coronavirus is running its course in China. Russia Oil Minister Alexander Novak underpinned prices saying his country is not excluding new joint measures with Opec. However, gains may be fleeting.
Saudi Aramco announced plans to ship 12.3 million barrels per day of crude in April.
EURUSD retreated steadily overnight, falling from 1.1457 to 1.1333 just before the European open. A subsequent rally failed at 1.1400, and the single currency is just above the overnight low in Toronto. Italy is closed in an effort to contain the spread of COVID-19. The head of the European Parliament, President David Sassoli said he was “self-quarantining” after a visit to Italy. Eurozone Q4 GDP grew 1.0% q/q, which was ignored by traders.
GBPUSD dropped on the back of broad US dollar demand, falling from 1.3119 to 1.3014. The Bank of England is expected to chop rates by 0.50% at month-end, which is also weighing on prices.
USDJPY rallied hard on the back of a jump in US Treasury yields and President Trump’s stimulus plans.
Prices were also boosted by the Japanese government’s plans for an additional $4.1 billion in spending. USDJPY surged to 105.20 from 102.02 before settling back to 104.80 in early New York trading.
AUDUSD and NZDUSD dropped alongside the other G-10 major currencies. AUDUSD losses were limited in part, by expectations the government would announce a $10 billion economic stimulus package, which analysts claim is “insufficient”.
USDCAD dropped on the reports of US government stimulus and the rebound in crude prices. However, the news that Saudi Arabia planned to increase crude shipments in April limited losses. The Canadian economy is vulnerable to further slowing if oil prices remain low and Q1 growth could be negative.
There are not any economic reports of note today.
USDCAD Technical Outlook
The USDCAD uptrend from the beginning of January is intact above 1.3320. The gap between 1.3425 at Friday’s close and 1.3480 at Monday’s Asia open is likely to be filled. Meanwhile, the technicals are bearish below 1.3680, looking for a break of 1.3610 to extend down to 1.3520. A break above 1.3700 targets 1.3770. For today, USDCAD support is at 1.3610 and 1.3550. Resistance is at 1.3680 and 1.3720. Today’s range 1.3610-1.3690.
Chart: USDCAD 4 hour
Source: Saxo Bank
