Photo: Wikimedia

February 8, 2021

USDCAD open (6:00 am ET) 1.2776-80,  Overnight Range 1.2757-1.2780,  Previous Close 1.2760

FX Ranges at a Glance:

Source: IFXA Ltd/RP

FX Recap and Outlook:   The US COVID-19 Relief package is the plan that keeps on giving.  Talk of new American fiscal stimulus has been lifting risk sentiment since Biden won the election.  That’s 97 days and counting, yet it has only been talk. No cheques have been cut.

Friday’s US employment report raised concerns that the US economic recovery may not be as robust as anticipated, and the US dollar retreated,  Prices recovered later in the day. The greenback added to those gains overnight.

Global risk sentiment continues to be positive, helped by the steadily declining numbers of new coronavirus cases in the US.  New reported cases dropped 20% in the past week with hospitalizations falling 13.8%.  In addition, the number of American’s receiving COVID-19 vaccines is rapidly rising.

EURUSD is trading near the bottom of its 1.2024-55 overnight range as rising US Treasury yields, and concerns about a slower than expected Eurozone economic recovery due to Trudeau-style COVID vaccine management. Former ECB President Mario Draghi is now future Italian Prime Minister after getting support from two political parties. The EURUSD technicals are modestly bullish but need to break above 1.2060 or risk a retest of 1.1950.

GBPUSD traded in a 1.3682-1.3740 range and is hovering near the overnight low in NY   The Bank of England appeared to push back the prospect of negative interest rates but still left them on the table, which may limit gains.

USDJPY is trading at the top of its 105.36-105.66 range, supported by firm US 10-year Treasury yields, which touched 1.2% overnight.  The currency pair is also benefitting from the unwind of risk aversion trades, as vaccine roll-outs gather steam.

AUDUSD and NZDUSD are modestly lower compared Friday’s close, due to broad US dollar strength.

USDCAD rallied after Canada’s ugly employment report on Friday, but the gains stalled at resistance in the 1.2850 area.  USDCAD traders are mostly ignoring domestic influences, although another bump in crude prices, helps to reinforce resistance areas.

The US and Canadian economic data calendars are empty.

USDCAD Technicals: The intraday technicals are bearish below 1.2840, looking for a break of minor support at 1.2750 to extend losses to 1.2680.  A break above 1.2840 targets  1.2880 then 1.2920. For today, USDCAD support is at 1.2740 and 1.2710.  Resistance is at 1.2810 and 1.2850  Today’s Range 1.2730-1.2820

Chart: USDCAD 4 hour

Source:  Saxo Bank

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

Source:  Saxo Bank