August 28, 2019
USDCAD Open (6:00 am EDT) 1.3298-01 Overnight Range 1.3284-1.3310
GBPUSD plunged from 1.2281 to 1.2157 on news that UK Prime Minister Boris Johnson plans to prorogue parliament during the first two weeks of September until October 14.
In a letter to MP’s Mr Johnson promised to “bring forward a new, bold and ambitious domestic legislative agenda for the renewal of our country after Brexit” adding “This morning I spoke to Her Majesty The Queen to request an end to the current parliamentary session in the second sitting week in September, before commencing the second session of this Parliament with a Queen’s speech on Monday October 14.”
The UK news made GBPUSD the worst-performing major G-10 currency since yesterday’s New York close, as the US dollar posted small gains across the board.
FX Market Snapshot- Change in Currency value vs the US dollar- NY close to NY open
Yield curve inversion and recession fears returned to the forefront yesterday and overnight. US 10year Treasury yields were 1.467% as of 6:20 am EDT while 2-year Treasury yields were 1.516%. The recession fears pressured AUDUSD. Weaker than expected economic data added to tis woes. NZDUSD tracked AUDUSD lower. USDJPY traded in a narrow 105.66-105.88 range.
EURUSD was steady, bordering on inert, trading in a 1.1084-1.1097 range. EURUSD gains are capped by rising USDCNY, dovish ECB expectations, Italian politics and Brexit. Eurozone economic data was not a factor for FX traders.
Oil prices got a lift after the American Petroleum Institute reported US crude inventories fell by 11.1 million barrels. WTI climbed from $53.77/barrel to $55.80/b in early New York trading today.
USDCAD bears got side-swiped yesterday by a shift to risk aversion sentiment from yield curve inversion, a lack of domestic data, and selling on Wall Street. The soft US Case-Shiller Home Price index also encouraged USDCAD buying.
The economic calendars for Canada and the US are empty today.
USDCAD Technical Outlook
“Flip, flop, fly,” The intraday technicals flipped to bullish with yesterdays break above 1.3280 which puts the focus on the “triple top” at 1.3340. A decsive break above 1.3240 targets 1.3550 and 1.3660. A break below 1.3230 would suggest further losses to 1.3000 and then 1.2750. For today, USDCAD support is at 1.3290 and 1.3260. Resistance is at 1.3310 and 1.3340. Today’s Range 1.3270-1.3340
Chart: USDCAD daily
Source: Saxo Bank