July 23, 2019

USDCAD open (6:00 am EDT) 1.3136-39           Overnight Range: 1.3120-1.3140

The reign of Boris Godunov, Tsar of Russia, preceded the Time of Troubles.  Boris Badenov terrorized Rocky and Bullwinkle. Boris Johnson is the 77th Prime Minister of Great Britain effective tomorrow.   Moses parted the Red Sea, and PM Johnson will part the English Channel leading,  the UK out of the European Union.

Traders voted with their wallets.  GBPUSD dropped from 1.2477 to 1.2420, continuing the slide from June 24. Bank of England Monetary (BoE) Policy committee member Michael Saunders suggesting Brexit could prevent the BoE from raising interest rates, didn’t help sentiment.   The currency pair was also weighed down by broad US dollar strength. However, in a case of “sell-the-rumour buy-the-fact,” GBPUSD fully recouped its overnight losses in early New York trading.

 President Trump tweeted out the news that Congress agreed to a two-year extension of the debt ceiling, which eliminates government shutdown risk.  He said “I am pleased to announce that a deal has been struck with Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer, Speaker of the House Nancy Pelosi, and House Minority Leader Kevin McCarthy – on a two-year Budget and Debt Ceiling, with no poison pills….”

Trump’s tweet, combined with Asia and European equity market upticks led to US dollar gains across the G-10 spectrum at this morning’s New York open.

EURUSD dropped alongside Sterling.  In addition to the US debt ceiling news, fears of a “more dovish than expected” ECB monetary policy meeting, Thursday, exacerbated the fall.

NZDUSD was the biggest loser after a Bloomberg article suggested the Reserve Bank of New Zealand was in the early stages of assessing a new, “unconventional monetary policy.” Prices dropped from 0.6757 to 0.6720 but opened in New York at 0.6727.   AUDUSD outperformed its Kiwi counterpart and is currently trading where it left off, yesterday.

USDJPY is back flirting with last week’s peak, underpinned by a bounce in US Treasury yields and by a 0.95% rise in the Nikkei 225.

Oil prices opened unchanged from the previous days close.  Prices are supported by elevated Middle East tensions but capped by rising US crude production and ongoing fears of lower demand from a global economic slowdown.

USDCAD rallied yesterday after May Wholesale Sales dropped 1.8% m/m.  Forecasters were expecting a 0.5% gain.  Statistics Canada blamed the automotive sector for the decline. The rally broke resistance at 1.3090 led to a test of 1.3040 overnight. 

Today’s data includes US Housing Price Index, and Existing Home Sales.  The Canadian calendar is empty

USDCAD Technical Outlook

USDCAD  snapped the 10-day range when it broke above 1.3090.  That move led to a probe of resistance at 1.3140 which is starting to crumble and targets the downtrend at 1.3160. A decisive break of that level opens the door to further gains to 1.3225.  A move below 1.3090 suggests a retest of 1.3120.  For today, USDCAD support is at 1.3120, and 1.3090.  Resistance is at 1.3160 and 1.3220.  Today’s Range 1.3110-1.3160

Chart: USDCAD 1 day