November 13, 2019

USDCAD open 1.3232-66 (6:00 am EST)    Overnight Range 1.3234-1.3266

US October CPI rose 0.4% in October, a tick higher than the 0.3% forecast and well-above the flat reading in September.  The bulk of the gains were due to a 2.7% gain in the energy index.  Core CPI ticked down to 2.3% from 2.4%.  The US dollar barely budged after the results.

The US dollar is modestly softer to start today’s session and have just drifted sideways in New York trading.

 FX Market Snapshot Daily

Change in currency value against the US dollar from Mon. NY open to Fri. NY open 

President Trump’s speech to the Economic Club of New York can be summed up in three words: “Ain’t I Great?” He appeared to be reading a self-written performance review, with an “outstandingly exceptional” rating.  Many traders didn’t agree. The speech disappointed as he failed to announce tariff rollbacks as some had expected.

EURUSD meandered within a 1.1002-19 range while ignoring weak (but better than forecast) Eurozone Industrial Production data. Traders are hoping that Thursday’s Eurozone and Q3 GDP data will provide some direction. Swiss National Bank (SNB)Chairman Thomas Jordan reminded markets that “monetary policy with negative rates and the readiness to intervene in currency markets is still necessary.” USDCHF traded lower following the remarks.

GBPUSD bounced within a 1.2824-1.2862 range overnight. Prices slid in Asia, rebounded in Europe, and then dipped in early New York trading. UK October CPI fell 0.2% m/m (forecast 0.1% m/m), and Retail Price Index, PPI and DCLG House Price data, were all weaker than expected.  Traders viewed the data as less important than the UK election.

USDJPY had a choppy session. Prices traded erratically in a 108.67-109.14 range, and they are just above the bottom in early New York trading.  A bout of risk aversion sentiment and lower US Treasury yields are weighing on the currency pair.

NZDUSD was the best performing G-10 currency pair after the RBNZ surprised markets and left interest rates unchanged. NZDUSD soared to 0.6416 from 0.6332. The RBNZ statement said, “The Monetary Policy Committee agreed that economic developments since the August Statement had been offsetting for the monetary policy outlook.”

AUDUSD underperformed due to AUDNZD selling pressures.

Oil prices suffered after President Trump’s speech failed to renew hopes of an early end to the US/China trade dispute.

USDCAD drifted higher alongside soft crude prices, a lack of top tier domestic economic data and broad US dollar strength. Traders are hoping for some new monetary policy insight from BoC Governor Stephen Poloz on Thursday.

Fed Chair Jerome Powell delivers “The Economic Outlook” to a joint session of Congress today. He is expected to reiterate that the Fed is in “wait and see” mode as he rehashes last month’s FOMC statement

USDCAD Technical View

The intraday USDCAD technicals are bullish and in a gently rising channel bound by 1.3225 on the bottom and 1.3272 on the top. The end-of-October uptrend is intact while prices are above 1.3200.  However, downtrend and 200-day moving average resistance in the 1.3270-80 area is guarding strong resistance at 1.3440. For today, USDCAD support is at 1.3220 and 1.3190.  Resistance is at 1.3270-80 and 1.3340. Today’s Range 1.3240-1.3340

Chart: USDCAD hourly

Source: Saxo Bank