September 30, 2019
USDCAD open 1.3243-47 (6:00 am EDT) Overnight range 1.3226-1.3246
There were plenty of theatrics over the weekend including, talk of American plans to prevent Chinese companies from listing on US exchanges, a UK iNews report that the Queen sought advice on how to fire Prime Minister Boris Johnson, and the Saudi Crown Price telling 60 minutes that the Kingdom did not want a war with Iran. It is also month end and quarter-end which may lead to some USDCAD selling pressure for the 11:00 am “Fix.”
The US dollar traded choppily inside tight bands and opened with small gains across the board
FX Market Snapshot
Change in currency value against the US dollar from New York close to New York open
EURUSD bounced inside a narrow 1.0921-46 range and opened at the low in early New York trading. The single currency upside is limited to expectations for continued weak Eurozone growth, the dovish ECB and bearish technicals that look for additional EURUSD weakness to 1.0650 on a break below 1.0885. Eurozone unemployment dipped to 7.4% from 7.5%, but the news didn’t impact trading. However, weaker than expected German Inflation data knocked EURUSD to 1.0988 from 1.1012 in early Toronto trading.
GBPUSD continues to trade with a negative bias after peaking at 1.2570 on September 20. Last weeks dovish comments from Bank of England policymaker ( a noted hawk) and the fast-approaching Brexit deadline are capping gains. GBPUSD touched 1.2328 before dropping to 1.2307 in early New York trading. However, prices are garnering a bit of support from news Q2 GDP rose 1.3%, beating the 1.2% forecast.
USDJPY dropped after the Bank of Japan Summary of Opinions report showed BoJ officials were discussing if additional monetary policy easing was needed. The move didn’t last because it wasn’t anything new. Prices were also supported by US Treasury yields which bounced from their low.
AUDUSD drifted lower overnight. It was unable to get any traction from the modestly better China Caixin Manufacturing PMI data (Actual 51.4 vs forecast 50.2) ahead of Tuesday’s Reserve Bank of Australia monetary policy meeting. Traders are worried that the RBA will cut the Overnight Cash Rate to 0.75% from 1.00%. NZDUSD sellers emerged following soft economic data and alongside AUDUSD weakness.
Oil prices slid to $55.15/barrel from $56.32/b. Prices were undermined by Saudi Crown Prince Mohammed bin Salam’s remarks that Iran poses a risk to world oil supplies and threatens the global economy.
USDCAD is flirting with support in the 1.3240 area. Month-end/quarter-end portfolio related USDCAD selling, modestly bearish intraday USDCAD technicals and neutral Bank of Canada expectations, limit gains. The downside is supported by broad US dollar demand, and soft oil prices limit the downside.
Canada Industrial Product Price and Raw Material Price Index data is due. US data includes Chicago PMI
USDCAD Technical View
USDCAD is coiling in an increasingly tighter trading range. A break above 1.3330 targets 1.3440 and then 1.3550. A break below 1.3170 targets 1.3030 and then 1.2950. For today, USDCAD support is at 1.3220 and 1.3170. Resistance is at 1.32600 and 1.3300. Today’s Range 1.3190-1.3160
Chart: USDCAD daily
Source: Saxo Bank