Photo: Wikimedia Commons
USDCAD Open (6:00 am) 1.3343-47, Overnight Range: 1.3342-1.3385
- Global equity trade sideways, ignoring 2.42% gain in Shanghai CSI 300 Index
- Gold prices consolidating but aiming for $2000.00/ounce
- US dollar extends losses and opens down against the majors.
Source: Saxo Bank/IFXA Ltd
FX Recap and outlook: The US dollar slid into the New York open. Traders’ are content to await the results of the FOMC meeting this afternoon. Yesterday, Wall Street closed on a down note, setting the tone for a mixed Asia session. Japan’s Nikkei 225 and Australia’s ASX index were a tad lower, while Hong Kong’s Hang Seng Index ticked higher. Those gains paled in the face of the 2.42% rally in China’s Shanghai Shenzhen CSI 300 index. The bullish sentiment didn’t carry forward into Europe. The major stock indexes bounced either side of unchanged. US equity futures are slightly positive.
Today’s FOMC meeting statement and Jerome Powell’s press conference give traders the excuse to do nothing, which will describe the price action until 2:00 pm ET. The Fed isn’t expected to offer anything new. They will be content to “sit and wait” until more data is available to enable them to assess the impact of their previous actions. The Fed announced a year’s worth of policy changes in March and will be content to await more data before doing anything else.
The US dollar continues to probe major resistance levels in G-10 currencies but until major support in the US dollar index at 93.15-93.30, further US dollar losses may be hard to come by.
US dollar index weekly chart
Source: Saxo Bank
EURUSD traded in a 1.1715-69 range overnight. It drifted in Asia, then rallied from 1.1740 to 1.1769 in Europe before retreating to 1.1747 at the NY open. The dollar continues to be on the defensive due to rising coronavirus cases, and social unrest in US cities. Markets are also waiting for a new stimulus plan to replace the CARES Act which expires Friday.
GBPUSD traders are as attracted to the 1.3000 level as mariners are to mermaids. Mermaids weren’t good for ships, and 1.3000 is unlikely to be healthy for GBPUSD bulls. The currency pair may be getting an added lift from month-end portfolio rebalancing flows. GBPUSD traded in a 1.2913-1.2975 range and is flirting with the top in NY trading.
USDJPY dropped to 104.81 on safe-haven demand for yen, thanks to rising US COVID-19 cases, and bearish technicals. The break below support at 106.10 and 105.50 targeted 104.40 and 102.95.
AUDUSD continued its post coronavirus lock-down recovery. Prices are just below the double-top resistance area of 0.7210-15) which contained upside since February 2019. NZDUSD lagged AUDUSD gains and opened unchanged.
Gold Prices (XAUUSD) continue to consolidate near record highs, supported by broad US dollar weakness, low G-10 interest rates, and geopolitical concerns. However, reports that Chinese banks acted to curb speculation have slowed gains.
USDCAD continues to bounce within a 1.3340-1.3430 range. Prices are weighed down by general US dollar weakness, and expectations for CAD demand due to portfolio rebalancing flows at month-end.
US Pending Home Sales, Wholesale Inventories and Goods trade balance data are on tap but will be largely ignored ahead of the FOMC meeting.
USDCAD Technicals: The intraday USDCAD technicals are bearish below 1.3390, looking for a break of 1.3330 and 1.3310 to extend losses to 1.3175. A break above 1.3390 will lead to a retest of downtrend resistance at 1.3440. For today, USDCAD support is at 1.3330 and 1.3310. Resistance is at 1.3390 and 1.3440. Today’s Range 1.3310-1.3390
Chart: USDCAD 4 hour
Source: Saxo Bank