September 3, 2020

USDCAD Open (6:00 am) 1.3094-98,  Overnight Range 1.3042-1.3117

  • Jobless Claims increase less than expected
  • Canada Trade deficit widens to $2.5 billion from $1.6 billion
  • US dollar opens higher vs G-10 m
  • ajors,

Source: Saxo Bank/IFXA Ltd

FX Recap and outlook: Weekly US Jobless claims fell 130,000 to 881,00.  This data also represents changes how the seasonal adjustment is calculated to provide a more accurate calculation.  The US trade deficit was worse than expected leading to a small US dollar retreat.  Nevertheless, the greenback is still bid.

Asia equity indexes closed higher except those in China. The French CAC index is up 1.58% on President Macron’s stimulus package, is leading European bourses higher.  Wall Street futures are undecided and are currently flat.  Oil and Gold prices slumped on the back of US dollar gains.

US dollar bulls are snorting “it’s a grind, grind, grind” to describe recent moves in the currency.  Just last week, analysts were certain EURUSD was heading to 1.2500.  Today, they are worried about a drop below 1.1760, sparking a plunge to 1.1550.

What’s changed?

August turned to September, for one.  ECB officials chirped veiled warnings about the EURUSD price level.  Also, analysts are predicting a very dovish ECB policy meeting on September 10, concerned that the central bank will adopt the Fed’s average inflation targeting policy. Stale, and stretched long EURUSD positions also weighed on prices as they started to get reduced.

EURUSD dropped from 1.1855 to 1.1790 in Asia but bounced to 1.1832 in Europe, before inching lower in NY trading. Eurozone Retail Sales fell 1.3% in July.  The forecast was for a gain of 1.5% m/m.  The intraday EUR?USD technicals are bearish below 1.1830, looking for a break below 1.1760 to extend losses to 1.1700.

GBPUSD mirrored EURUSD action . It dropped to 1.3246 in NY after an overnight 1.3268-1.3358 range. August Services PMI was weaker than expected at58.8 compared to July’s 60.1 results.  Traders may also be re-evaluating long positions with the next round of EU/UK trade talks starting next Tuesday. The intraday technicals are bearish below 1.3340 looking for a drop to 1.3150.

USDJPY remains in a 105.00-107.00 range. For today, the uptrend from August 30 is intact above 106.20, which is only a corrective bounce while the longer-term downtrend resistance at 107.05 is in play. 

AUDUSD extended the slide that began  September 1 after prices reached 0.7410.  The decline was exacerbated overnight when Australia’s surplus narrowed, missing forecasts. However, firm Chinese Caixin Services PMI data provided some support.

NZDUSD followed Aussie lower as both currencies suffered from the resurgent greenback.

USDCAD rallied on the back of broad US dollar demand.  A drop in crude prices contributed to the rally. Traders are looking ahead to Friday’s Canadian and US employment data.

US Trade data, Jobless Claims and ISM Services PMI reports may provide some US dollar direction today. Canada’s Trade deficit is forecast to narrow to $2.5 billion from $3.19 billion.

USDCAD Technicals:  The intraday technicals are bullish above 1.3050, looking for a break of 1.3120  to extend gains to 1.3160.  However, the rally is merely a correction while prices are below 1.3220. For today, USDCAD support is at 1.3050 and 1.3020.  Resistance is at 1.3120 and 1.3160.   Today’s Range 1.3070-1.3160

Chart: USDCAD  daily

Source:  Saxo Bank

FX open (6:00 am EDT) High, Low, and previous close

Source:  Saxo Bank