November 26, 2019

USDCAD open 1.3312-15 (6:00 am EST)    Overnight range 1.3300-1.3314

Another Asia session, another bout of positive risk sentiment.  Fed Chair Jerome Powell said “At this point in the long expansion, I see the glass as much more than half full. With the right policies, we can fill it further, building on the gains so far and spreading the benefits more broadly to all Americans.” 

 In addition, there were fresh reports that China Vice Premier Liu He, US Trade Representative Robert Lighthizer, and Treasury Secretary Steven Mnuchin reached a broad consensus for a Phase 1 deal

European traders were a tad less enamoured by the stories and the US dollar returned to it’s New York closing levels.  GBPUSD was the exception.

FX Market Snapshot

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

Source:  Saxo Bank/IFXA

FX traders are hugging the sidelines. They do not want to get too involved ahead of the evaporation of market liquidity, which will become more pronounced from tomorrow around noon and not returning to normal until Monday.

Sterling traders are the exception. They bought GBPUSD yesterday following polling data projecting a Conservative majority and sold it today after a senior DUP official suggested his party would back a minority Labour Government if Jeremy Corbett were replaced. GBPUSD dropped from 1.2902 in Asia to 1.2853 in early New York trading

EURUSD is trading like a pegged currency, drifting in a 1.1008-1.1019 range. German GfK Consumer Confidence Survey was 9.7 vs 9.6 previously and was a non-factor for traders.

USDJPY jumped to 109.20 from 108.92 because of Powell’s comments, and the latest round of US/China trade talk stories. The rally was short-lived, and prices retraced to Monday’s closing level. The USDJPY dip mirrored a drop in 10-year US Treasury yields which fell to 1.74% from 1.76%

AUDUSD and NZDUSD dipsy-doodled inside their recent ranges and opened in New York, unchanged from Monday’s close. Better than expected New Zealand Retail Sales data failed to provide lasting support.

USDCAD opened slightly firmer compared to yesterday’s close. Sentiment is bullish while prices are above 1.3300 although waning upside momentum and the risk of month-end USDCAD selling due to portfolio rebalancing flows. Canada September GDP data is also released Friday. It is expected to be soft (forecast 0.1% m/m) Q3 GDP is forecast at 1.2% q/q compared to 3.7%/q/q, previously.

There is a ton of US data released today and tomorrow. Today’s reports include September Housing Price Index, New Home Sales, Consumer Confidence, and Wholesale Inventories.

USDCAD Technical View

The intraday USDCAD technicals are bullish above 1.3300, looking for a break above 1.3330 to extend gains to 1.3380.  A move below 1.3300 shifts the focus to support in the 1.3240-60 area. Longer term, a breach of 1.3220 would suggest a short term top at 1.330 is in place, and suggest further losses to 1.3150.  For today, USDCAD support is at 1.3300 and 1.3260.  Resistance is at 1.3330 and 1.3380.  Today’s Range 1.3280-1.3330

Chart:  USDCAD 4 hour