April 26, 2019

USDCAD Open (6:00 am EDT) 1.3493-96   Overnight Range 1.3471-1.3496

The US economy is picking up steam   Real GDP rose 3.2% in Q1, 2019, rising well-above the 2.1% which was predicted.  The FX market reaction was underwhelming. EURUSD dropped to 1.1112 from 1.1135 then promptly bounced back to 1.1150.  GBP dropped to 1.2872 from 1.2890 and then surged to 1.2912.  USDCAD popped to 1.3490 then sank to 1.3472.  The Michigan Consumer Sentiment Index is due later this morning and expected at 97.0.

It was a slow news night, and FX traders sat on their hands.  The US dollar opened close to flat against the major G-10 currencies, although AUDUSD and NZDUSD modestly outperformed.

The Antipodean currencies got a bit of a lift after reports that China President Xi Jinping could visit Washington in June, to sign a trade deal. Thursday, President Trump  said Mr Jinping would visit “soon.”

Today’s US Q1 GDP data (Forecast 2.1%) could kick off another bout of US dollar buying if it is higher than expected.  On the other hand, a weaker than expected report would spark a broad US dollar sell-off.

EURUSD traded sideways in a narrow range and just above this week’s low.  Weak Eurozone data, dovish ECB speak, bearish technicals and broad US dollar strength have undermined the single currency.

GBPUSD has climbed steadily after finding a bottom at 1.2862 yesterday, but it is struggling to gain traction above 1.2920. There hasn’t been any new data or fresh political developments.

USDCHF is supported by comments from Swiss National Bank President Thomas Jordan saying that the SNB is ready to use negative interest rates and FX intervention, when appropriate.  Nothing new.

USDJPY is close to unchanged for the week.  Japanese traders appear less concerned with the dovish comments from the Bank of Japan, weak data and a dip in equity markets and instead are focused on the upcoming “Golden Week” holidays which last from April 27 to May 4.

Oil prices are in free-fall.  WTI dropped from $66.23/barrel yesterday to 63.83/b overnight. Previously bullish traders headed for the exit after reports that Opec will boost production to offset losses from Iran sanctions.  However, that isn’t really news which suggests today’s price drop is merely profit taking.  WTI was $58.24/b at the end of March.

USDCAD continues to consolidate gains following the break of resistance at 1.3460.  Price support stems from the Bank of Canada’s dovish bias and its apparent removal of rate hike risks for 2019.

USDCAD Technical Outlook

The intraday USDCAD technials are bullish while trading above 1.3460 but need to break above resistance in the 1.3520-60 area to trigger fresh demand. A move bleow 1.3460 would extend down to 1.3420 and then 1.3380.  Longer term, the uptrend from January 2018 is intact while prices are above 1.3220.  A move above the double top at 1.3650 would target 1.3855.  Tdoay’s Range 1.3460-1.3520