September 9, 2020
USDCAD open (6:00 am ET) 1.3223-27, Overnight Range 1.3219-1.3258
- GBPUSD rout continues due to no-deal Brexit fears-Prices drop from 1.2981 to 1.2921
- Asia stock markets sink with Wall Street, Eurozone stocks rebound, US futures are in the green
- US dollar opens mixed- Commodity currency bloc inches higher
Source: Saxo Bank/IFXA Ltd
FX Recap and Outlook “No-deal” Brexit fears and a wobbly Wall Street captivated traders in Asia. GBPUSD traded lower and the major Asia equity indices sank. China’s Shanghai Shenzhen CSI 300 index plunged 2.34%, and the Nikkei tumbled 1.04%. European traders were not nearly as bummed out. Germany’s DAX led European bourses higher and helped to drive S&P 500 futures into positive territory. Oil prices rallied, but gold prices are trading at their session lows.
Traders took note of reports that Astra Zeneca’s COVID-19 vaccine had a set-back, while concerns about a second-wave coronavirus outbreak build.
GBPUSD is hovering at 1.2932, just above its overnight low. Traders are awaiting the UK government’s publication of its Internal Markets Bill, a document which explains why they are breaking the previously agreed to EU exit agreement. The GBPUSD technicals are bearish below 1.3040 looking for a break below 1.2910 to extend losses to 1.2790.
EURUSD is probing support in the 1.1750-60 area, which if broken will see a test of 1.1700. The single currency is under pressure ahead of tomorrow’s ECB meeting. Many traders are expecting policymakers to follow the Fed’s lead and issue a very dovish statement. Those sellers risk disappointment. ECB took aggressive steps in June and President Christine Lagarde said that they had plenty of time to assess incoming data. A little over two months does not constitute” plenty of time.”
USDJPY hit its overnight low of 105.80 following the news of Astra Zeneca’s COVID-19 set-back. Prices recovered alongside the bounce in US equity futures, and are trading at 106.11 in NY.
AUDUSD bounced on the back of better than expected consumer sentiment data while NZDUSD got a lift from improving business confidence.
USDCAD peaked in Asia, touching 1.3258, on the bout of risk aversion sentiment sweeping through the region. The outlook improved in Europe with the equity market rebound. Traders are awaiting today’s Bank of Canada meeting.
Ontario has delayed the further easing of COVID-19 restrictions by four weeks, which gives the BoC an excuse to reinforce their dovish message.
There are not any economic reports of note from Canada or the US.
USDCAD Technicals: The short-term USDCAD technicals turned bullish with the break of 1.3130, the mid-July downtrend line. The rally has stalled at resistance in the 1.3260-70 area. A break above this level opens the door to further gains to 1.3400, while a move below 1.3180 suggests another dip to 1.3050. For today, USDCAD support is at 1.3205 and 1.3180. Resistance is at 1.3270 and 1.3320. Today’s Range 1.3190-1.3290
Chart: USDCAD 4 hour
Source: Saxo Bank