The US dollar is the “Mike Tyson” of the FX world. The greenback may not have bitten off any ears, but it continues to lay a beating on FX markets. Overnight, the commodity currency bloc was knocked to the canvas. AUD, NZD, and CAD were KO’d on falling commodity prices which have been undermined by the US/China trade dispute. The US administration has turned the screws on China by refusing to negotiate until China offers up proposals to deal with American complaints.FX sentiment wasn’t helped by another drop in global equity indices either. Alphabet and Amazon reported higher earnings per share after the close yesterday, but that didn’t satisfy investors who were more concerned about lower revenues. The major Asia equity indices closed with losses; the European bourses are in the red and US equity futures point to a negative open on Wall Street.Q3 US GDP data (forecast 3.3%) is the key focus. Higher than expected results should help improve market sentiment
EUR & GBP
EURUSD and GBPUSD traded sideways in Asia but started to drift lower in Europe and early New York trading. USDJPY dropped steadily, falling from 112.43 to 111.47, undermined by rising risk aversion and falling US Treasury yields.
WTI
WTI oil prices continue to bounce within a $66.00-$67.70/barrel range. Concerns about the loss of Iranian oil production because of US sanctions are offset by rising US inventories and fears of a global economic slowdown..
CAD
The warm, fuzzy feeling that enveloped the Canadian dollar following the somewhat hawkish Bank of Canada policy meeting statement and Monetary Policy Report has faded into oblivion. The BoC isn’t likely to raise rates aggressively if global economic growth is cratering. USDCAD direction will be dictated by Wall Street and general US dollar sentiment.
The intraday USDCAD technicals are bullish. The break above 1.3110 and then 1.3140 suggests further gains to 1.3190 and 1.3240 are likely. A drop below support at 1.3070 would extend losses to 1.3010. If the rally stalls , USDCAD is likely to chop about inside a 1.3000-1.3160 range. For today, USDCAD support is at 1.3110 and 1.3070. Resistance is in the 1.3150-60 area and then 1.3190.
Today’s Range 1.3070-1.3170