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September 23, 2020
- Canada Parliament reopens- Throne Speech plus special TV address by Trudeau
- Dovish RBNZ sinks NZDUSD-negative interest rates are in the pipeline
- US dollar rally slows
FX Ranges at a Glance
Source: IFXA Ltd/RP
FX Recap and Outlook: Justin Trudeau, the Prince who will make us Paupers, re-opens Parliament today. He hopes to shift the narrative from Liberal corruption, and pork-barrel politics, to an agenda of climate-change-focused spending, and Swedish style socialism. Canadian taxpayers and the Canadian dollar will be victims of his plans.
The US dollar maintained its bid tone overnight supported by yesterday’s steady Existing Home Sales data, and the US governments passing of a government funding bill. However, gains may be limited because the government has not passed extensions to expiring Coronavirus Relief bills.
EURUSD pushed below 1.1700 in Asia and dropped to 1.1673 before climbing to 1.1718 in NY. Eurozone Markit Manufacturing PMI (preliminary September) was 53.7, beating the forecast of 51.9. German Manufacturing PMI saw a similar result. (actual 56.6 vs forecast 52.5) Disappointing Services and Composite PMI data offset that news. Prices bounced alongside a jump in Euro area stock prices. The intraday EURUSD technicals are bearish.
GBPUSD sank under the weight of concerns about a COVID-19 second-wave outbreak. The news exacerbated downward pressure after Bank of England officials admitted in-depth discussions about negative interest rates. UK PMI data underpinned prices, and GBPUSD rose from an overnight low of 1.2677 to 1.2747 in NY.
USDJPY was directionless in a 104.90-105.18 range, supported by yesterday’s US data.
NZDUSD dropped to 0.6592 from 0.6646 following a dovish monetary policy outlook from the RBNZ. They left interest rates unchanged at 0.25% but delivered a pessimistic outlook suggesting the recovery was stalling. They explicitly noted that the banking system was “on track to be operationally prepared for negative interest rates by year end”.
AUDUSD got spanked after Westpac Bank predicted the RBA would cut interest rates to 0.10% from 0.25% October 6. AUDUSD dropped from 0.7176 to 0.7114.
USDCAD climbed steadily, rising from 1.3296 to 1.3345 before dipping to 1.3319 at the NY open. Prices are closely tracking EURUSD moves. USDCAD could explode higher if today’s Throne and Trudeau speech are viewed as fiscally irresponsible.
Fed Chair Jerome Powell continues his Congressional testimony today. US data includes Housing Price Index, and Markit Manufacturing PMI. The Canadian calendar is empty.
FX Recap and Outlook:
USDCAD Technicals: The intraday technicals are bullish above 1.3150, a level guarded by former resistance, now support at 1.3260 The intraday rising channel has bottom support at 1.3290 and top resistance at 1.3370, looking for further gains to 1.3550. For today, USDCAD support is at 1.3300 and 1.3260. Resistance is at 1.3360 and 1.3420. Today’s Range 1.3300-1.3370.
Chart: USDCAD 4 hour
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank