August 13, 2019

USDCAD Open (6:00 am EDT) 1.3258-61 Overnight Range 1.3237-1.3264

The US Bureau of Labor Statistics reported “the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in July on a seasonally adjusted basis after rising 0.1 percent in June.  Over the last 12 months, the all items index increased 1.8 percent before seasonal adjustment.”  The higher inflation reading supports views that the Fed may not need to be aggressive in cutting rates.  The US traded mixed after the data.

Chart: US CPI

Source: US Bureau of Labor Statistics

Overnight, the major Asia equity indices took their lead from Wall Street and are down across the board. Hong Kong’s Hang Seng index lost 2.10% while the Nikkei 225 in Japan shed 1.11%.  Gold prices rose $17.45 to $1,527.38 as of the New York open, oil prices are lower, and economic data was mixed.

The FX market opened in New York on a mixed note. CAD, EUR and GBP posted small losses while JPY, CHF, AUD and NZD were a touch higher, compared to the US dollar.

In Asia, AUDUSD drifted higher after a modest increase in Business Confidence data.  Comments by RBA Deputy Governor Christopher Kent suggesting that unconventional monetary policy was possible but unlikely, underpinned prices. NZDUSD underperformed AUDUSD but still managed to post a tiny gain.

USDJPY attempted to rally during the Asia morning. The rally failed, and it changed direction in the afternoon. Prices continued to slide in Europe and into the New York open. Negative risk sentiment stemming from the prolonged China/US trade war, another Italian political mess, and elevated “no-deal Brexit risks, alongside bearish USDJPY technicals are weighing on the currency pair. Traders are also worried about Argentina’s latest meltdown and talk of new debt default risks.

EURUSD traded sideways until just before today’s New York open when prices jumped from 1.1183 to 1.1220 in what looks to be a safe-haven demand rally. USDJPY and USDCHF dropped at the same time. The rally occurred despite mixed German data, and weaker than expected Eurozone ZEW Economic Survey data. (ZEW Aug Actual -43.6 vs forecast -21.7). 

GBPUSD is trading at its best levels of the overnight session.  Prices are supported by better than expected employment data led by a jump in wage growth. Sentiment is still negative over UK politics and Brexit.

WTI oil prices continue to bounce inside the $51.00/barrel-$56.00/b range that has contained price action in August. Rising US production and supply combined with fears of a prolonged US/China trade war are limiting gains. Opec production cuts and Middle East tension have put a floor under prices.

USDCAD is drifting with the ebbs and flows of the greenback. There aren’t any domestic economic reports of note this week, leaving the currency to consolidate inside a 1.3180-1.3350 range.

USDCAD Technical Outlook

The intraday USDCAD technicals are bullish while prices are above 1.3180. The break above downtrend line resistance at 1.3240 overnight, shifts the focus to 1.3380 However, a break below 1.3180 would turn the outlook bearish and target 1.3050.  For today, USDCAD support is at 1.3230 and 1.3180.  Resistance is at 1.3290 and 1.3320.  Today’s Range 1.3240-1.3330

Chart: USDCAD  30 minute

Source:  Saxo Bank