November 14, 2019
USDCAD open 1.3262-65 (6:00 am EST) Overnight Range 1.3252-1.3265
Weaker than expected economic reports released by Japan, China, and Australia, left a chill on risk sentiment. Markets were already disappointed by reports that China/US trade talks were snagged.
The US Japanese yen and Swiss franc inched higher, while the commodity currency bloc and Eur trickled lower
FX Market Snapshot Daily
Change in currency value against the US dollar from Mon. NY open to Fri. NY open
Fed Chair Powell’s testimony to Congress reconfirmed the market’s view that the Fed was on hold. Mr Powell said, “We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2 percent objective.”
The Wall Street Journal reports the US/China trade talks are somewhat stalled due to differences over agricultural purchases. The US wants a significant dollar commitment which China opposes. Weaker than expected China October Industrial Production (Actual 4.7% y/y vs forecast 5.4% y/y) and Retail Sales (Actual 7.2% y/y vs forecast 7.9% y/y) underscored the trade war risks.
AUDUSD got hammered, dropping from 0.6839 to 0.6783, when the Australian employment report showed a loss of 19,000 jobs. Markets expected a 15,000 increase. The weak China data exacerbated the losses and AUDUSD opened in New York near session lows.
NZDUSD traded lower on the back of the soft China data. However, losses were limited due to the lingering positive sentiment from the RBNZ’s failure to cut interest rates, yesterday.
USDJPY drifted lower alongside falling Treasury yields. Japan Q3 GDP rose 0.1% (forecast 0.2%) Traders ignored the Economics Minister’s spin on the results. He claimed the data showed that the economy was recovering.
EURUSD popped to 1.1014 from 1.0995, when German Q3 GDP data showed a 1% gain, y/y. The move was quickly reversed. Eurozone Q3 GDP rose 1.2% (forecast 1.1%), but EURUSD selling persisted, and the single currency is trading at overnight lows in New York. Technical analysts suggest EURUSD needs to break below 1.0950 or above 1.1070 for clarity on direction.
GBPUSD continues to consolidate it’s October gains from the 1.2220 low in a 1.2760-1.2860 range. Weaker than expected UK October Retail Sales (Actual 3.1 vs forecast 3.7% y/y) weighed on prices.
Oil prices firmed on the back of yesterday’s API report, which showed crude inventories only fell by 0.5 million barrels. Prices got an added lift after OPEC Secretary-General Mohammad Barkindo said US shale growth would slow. WTI rose from $56.30/b yesterday to$57.75 in New York today.
USDCAD rallied, supported by the general drift to safe-haven trades sparked by the soft China data and trade talks disappointment. Bank of Canada Governor Stephen Poloz will regale attendees to the Asia Economic Policy Council in San Francisco today. He will talk about “The fourth industrial revolution but likely not provide any fresh insight into the Canadian monetary policy outlook.
Canada New Housing Price Index rose 0.2% (forecast 0.1%). US Jobless claims were 225,000 and PPI rose 0.4%
USDCAD Technical View
The intraday USDCAD technicals are bullish. However, the intraday gains appear to be “over-done” with momentum slowing in front of trend-line and 200-day moving average resistance in the 1.3270-80 area. A drop below 1.3240 would extend losses to 1.3210, which if broken, would lead to 1.3170. A break above 1.3280 targets 1.3350. or today, USDCAD support is at 1.3240 and 1.3210. Resistance is at 1.3270-80 and 1.3340. Today’s Range 1.3210-1.3280.
Chart: USDCAD DAILY
Source: Saxo Bank