September 27, 2019
USDCAD open 1.3255-58 (6:00 am EDT) Overnight range 1.3257-1.3277
There wasn’t any shortage of US economic data this morning. Unfortunately, FX traders weren’t impressed with it. August Durable Goods Order were better than expected, rising 0.2% (forecast -1.0%) while Personal Consumption Expenditures-Price index data was mostly negative. FX markets barely budged when the reports were released.
The US dollar gave back some of yesterday’s small gains when it opened in New York today.
FX Market Snapshot
Change in currency value against the US dollar from New York close to New York open
GBPUSD awoke from an Asia slumber and fell off a cliff. The currency pair traded sideways in a 1.2311-35 range until the European session when it plunged to 1.2272 following comments by Bank of England policymaker Michael Saunders. He warned that prolonged Brexit uncertainty could lead to rate cuts. To be fair, he also said that rates could go higher if global growth recovers and Brexit uncertainty fall significantly. Traders ignored that part of his speech.
EURUSD traded quietly in a narrow band but with a negative bias, thanks to more soft economic reports. Eurozone September Consumer Confidence (Actual 9.5 vs forecast 9.3) was better than expected. The good news was offset by weaker than forecast Industrial Confidence, Business Climate and Economic Sentiment indicator data. Consumer Confidence was unchanged. EURUSD dropped to 1.0906 before rebounding to 1.0927 in early New York trading.
USDJPY found at bottom at 107.67 in Asia and then climbed steadily, reaching 108.05 in New York. The rally coincided with a bounce in US 10-year Treasury yields from 1.68% to 1.72%, alongside a modest bout of broad US dollar weakness.
AUDUSD and NZDUSD traded narrowly. AUDUSD bulls were cautious ahead of next week’s Reserve Bank of Australia policy meeting. Many analysts expect the RBA to cut rates 0.25% to 1.75%, but the call is not unanimous.
West Texas Intermediate (WTI) oil prices are trading near their low for the week at $56.65. Global growth sentiment improved on news that the US and China plan fresh trade talks in Washington on October 10. It wasn’t enough to stave off oversupply concerns. The International Energy Administration (IEA) warned it might cut its global oil demand estimates if the global economy weakens further.
USDCAD fluttered in a narrow range. The upside was capped by modest US dollar selling pressures and perhaps a bit of CAD demand from pre-month-end portfolio rebalancing flows. Lower crude oil prices slowed losses.
USDCAD Technical View
The intraday technicals are mildly bearish below 1.3295, looking for a break of the September uptrend line which comes into play in the 1.3230-35 zone. A move below this level targets 1.3180 and then 1.3140. A break above 1.3295 suggests a retest of 1.3360. For today, USDCAD support is at 1.3240 and 1.3210. Resistance is at 1.3270 and 1.3300. Today’s Range 1.3220-1.3290
Chart: USDCAD 4 hour
Source: Saxo Bank
