December 19, 2019
USDCAD open 1.3116-20 (6:00 am EST) Overnight range 1.3110-1.3118
Sterling is the Donald Trump of FX; It’s always front page news, at least for the past couple of weeks. FX markets were well-behaved overnight even with Australia employment data, the Bank of Japan monetary policy meeting, US Retail sales and the just happening Bank of England rate decision.
The US dollar closed on a mixed note yesterday and opened with small losses across the board. NZDwas the exception, posting a tiny loss while CAD opened unchanged.
FX Market Snapshot
Change in currency value against the US dollar from NY close to NY open
Source: Saxo Bank/IFXA
The Democrat-controlled House of Representatives impeached President Trump. Cynics believe the impeachment is revenge for Republican’s doing the same to Bill Clinton, exactly 21 years ago and also payback for not electing Hillary.
The Bank of England left rates unchanged at 0.75% in another 7-2 vote. Two voters, Jonathan Haskel and Michael Saunders wanted rates cut based on softer than expected economic growth and slowing employment growth. Earlier, UK Retail Sales disappointed, rising 1.0% in November instead of the 2.1% which was a nineteen month low.
EURUSD traded with a modestly bullish bias, rising from 1.1113-1.1142 in Asia and until New York opened and sellers knocked to 1.1124.. There wasn’t any Eurozone data of note. Sweden’s Riksbank ended its negative interest rate policy and hike rates to the lofty 0.0% level. Perhaps, it’s a sign of the ECB’s 2020 interest rate path.
The Bank of Japan left rates unchanged at -0.1% and the 10-year JGB yield target at 0%. BoJ Governor Haruhiko Kuroda said that overseas risks remained at high levels justifying a policy easing bias. USDJPY trading was lethargic inside a 109.52-109.67 range, with firm 10 year Treasury yields underpinning prices.
AUDUSD jumped to 0.6882 from 0.6847 after the Australian Bureau of Statistics said Australia gained 39,900 jobs in November, compared to the forecast for a 14,000 increase. However, 35,700 of those jobs were part-time, which tarnishes the news, although not enough to erase the post -news gains. Prices are also supported by the news of a potential US/China Phase 1 trade deal. NZDUSD tracked AUDUSD moves.
USDCAD was sidelined overnight, trading in a 1.3110-1.3118 range. Prices are supported by yesterday’s 2.2% Core Inflation reading for November and the strength in WTI oil prices. The firm CPI result, which was expected by the Bank of Canada, and supports expectations for a period of stable unchanged domestic rates. Oil prices got an added lift from the EIA report showing a drop in US crude inventories last week.
Today’s US data releases which include Existing Home Sales, Jobless Claims, and the Philadelphia Fed Manufacturing Index were at tad soft, which gave the greenback a modicum of support. Canada Wholesale Sales for October were below expectations .
USDCAD Technical View
The intraday technicals are bearish while prices are below 1.3170 and are looking for a break of support in the 1.3095-1.3105 area to extend losses to 1.3040 and then 1.3010. A move above 1.3190 suggests renewed 1.3115-1.3340 consolidation. For today, support is at 1.3105, 1.3090 and 1.3060. Resistance is at 1.3140 and 1.3180. Today’s Range 1.3090-1.3150
Chart: USDCAD 30 minute
Source: Saxo Bank