FX markets were bumpy overnight as traders bopped and weaved with little conviction ahead of the US mid-term election results. Normally, these elections do not attract much interest, from American voters and markets alike. However, the CNN type media has hyped today’s vote as a game-changing ”Blue Wave” which will neutralize President Trump and expose him to impeachment proceedings.
The US dollar opened in New York little changed from yesterday’s closing levels, but the overnight session wasn’t a complete write-off. The Reserve Bank of Australia left interest rates and the policy statement unchanged but upgraded its economic outlook. GDP is forecast to grow at 3.5% (previous 3.25%) in 2018 and 2019. AUDUSD touched 0.72388 on the news and opened in New York close to that level.
Sterling is cautiously bid. A string of Brexit headlines which have been largely positive has underpinned the currency and made GBPUSD bears very nervous. The Irish border issue is the major sticking point, but negotiators seem to be making progress. GBPUSD rallied from 1.3040 to 1.3083 in Asia and early European trading but dropped to 1.3023 when an Irish DUP official said: “ it looks like we are heading for a no deal.” GBPUSD popped from 1.3030 to 1.3063 as this was being written when a reporter tweeted that UK negotiator gave a ”thumbs up” when he left a cabinet meeting.
Eurozone Services PMI and Producer Price Index data beat forecasts but didn’t have much of an impact on EURUSD trading. The single currency traded in a narrow 1.1392-1.1424 range and is trading near the bottom of that band. USDJPY traded with a bearish bias in Europe, in part because US Treasury yields slipped.
Oil prices are soft despite the US/Iran sanctions. Traders are concerned about slowing global growth and rising US inventories. Turkey said it would not pay heed to the US sanctions on Iran.
USDCAD continues to bounce inside a 1.3060-1.3160 range. Prices are supported by mildly soft data, recently and weak oil prices. However, Bank of Canada Governor Stephen Poloz has not changed his tune about raising interest rates to reach the the neutral rate, which helps to cap gains. Today’s US and Canadian economic reports are third-tier and not likely to spur any trading interest. The intraday USDCAD technicals are unchanged from yesterday. USDCAD is bullish while prices are above the 1.3060-70 level, looking for a break of resistance in the1.3160 areea to extend gains to 1.3250. For today, USDCAD support is at 1.3105 and 1.3070. Resistance is at 1.3160 and 1.3190.
Today’s Range 1.3090-1.3150