April 24, 2019
USDCAD Open (6:00 am EDT) 1.3450-53 Overnight Range 1.3424-1.3459
USDCAD extended yesterday’s gains overnight, supported by AUDUSD and NZDUSD weakness and general US dollar strength. WTI oil prices above $66.00/barrel have slowed USDCAD gains, but the correlation between the currency and crude has weakened. Instead, traders are focused on today’s Bank of Canada policy statement and quarterly Monetary Policy Report. They expect it to be dovish, underscored by a downgrade of GDP growth expectations and the removal of any references to “rate increases.” If so, a test of 1.3522 is likely.
In Asia, AUDUSD got spanked Australia inflation data was weaker than expected, (Q1 CPI Actual 0.0% vs forecast 0.2% and previous 0.5%, q/q), leading to a couple of banks, like JPMorgan, and Citi predicting interest rate cuts in May and June. AUDUSD dropped from 0.7100 through support at 0.7050 and is targeting 0.6850.
USDJPY struggled to find direction and traded sideways in a 111.76-111.97 range. A dip in Treasury yields contributed to the lack of upside pressure.
EURUSD traded with a negative bias. Another weak German IFO survey undermined the single currency. Current Assessment, Expectations, and Business Climate indices were lower than last months and weaker than forecasts.
GBPUSD found a bottom at 1.2919 in early London trading and then perked up. Profit taking and EURGBP sales helped lift GBPUSD to 1.2947 in early New York trading.
Oil prices are steady. WTI dipped in Asia after API reported a 6.0 million barrel increase in US crude inventories. Prices recovered in Europe when Saudi Arabia said that it didn’t have any plans to adjust production in May.
The S&P 500 and Nasdaq made record highs yesterday, and traders are hoping that earnings reports from Boeing, Caterpillar and Facebook keep the good times rolling.
There aren’t any US or Canadian economic reports on tap today.
USDCAD Technical Outlook
USDCAD is making a break. Prices blasted through resistance in the 1.3390-1.3405 area and are threatening resistance in the 1.3460-80 zone. A break above 1.3480 targets 1.3520. A move above 1.3520 opens the door to 1.3750. A move below 1.3390 would suggest a period of 1.3320-1.3480 consolidation. For today, USDCAD support is at 1.3420 and 1.3380. Resistance is at 1.3460, 1.3480 and 1.3520. Today’s Range 1.3405-1.3520
Chart: USDCAD daily