September 9, 2019
USDCAD Open (6:00 am EDT) 1.3159-63 Overnight Range 1.357-1.3182
Sterling traded poorly to start the Asia session. GBPUSD gapped lower from Friday’s close of 1.2289, to 1.2265. Prices bounced in that range until the European’s started their day, when prices dropped to 1.223. News that another Conservative party minister quit Cabinet, and rising fears of a “no-deal Brexit” weighed on prices. The move was short-lived. A host UK data reports reversed the losses, and GBPUSD steamrolled upwards, touching 1.2361 in early New York trading. July GDP, (actual 0.3% m/m vs forecast 0.1% m/m) Manufacturing Production, Industrial Production and, Trade Balance, were better-than-expected.
The US dollar opened in a mild risk-seeking environment. The traditional safe-have currencies (JPY and CHF) were lower while the commodity currency bloc was a tad firmer.
FX Market Snapshot
Change in Currency value vs the US dollar- NY close to NY open
EURUSD tracked GBPUSD higher but ran into a wall at 1.1041 and prices dropped to 1.1023 in New York.
The prospect of further ECB monetary policy easing is weighing on the currency.
Asia traders walked in digesting the impact of Friday’s weaker than expected nonfarm payrolls report and Fed Chair Jerome Powell’s remarks. He said “We are not forecasting or expecting a recession” but didn’t dissuade anyone from expectations of a rate cut on September 18.
Australia July Home Loans rose 5.0% and helping to lift AUDUSD from 0.6839 to 0.6871. Prices were also supported by broad US dollar weakness, following Friday’s soft nonfarm payrolls report. The massive NZDUSD short-squeeze continued with prices rising from 0.6415 to 0.6442. The modestly better tone to US/China trade talks underpinned prices and a break above 0.6470 targets 0.6660.
USDJPY dropped to 106.71 when Asia opened and then inched higher to 107.07. Prices were supported by last week’s rally in US Treasury yields and the improved outlook for global growth with the resumption of the US/China trade talks.
Oil prices climbed after the new Saudi Arabia oil Minister Prince Abdulaziz bin Salman suggested that there wouldn’t be any change in the current oil policy. WTI Rose from $56.73/barrel to $57.25/b before drifting down to $56.85 in early New York trading.
USDCAD consolidated Friday’s losses in a 1.3157-1.3182 range. Better than expected Canadian employment data and weak NFP results drove USDCAD through support at 1.3190. Prices remain under pressure thanks to rising crude oil prices.
The Canadian and US economic calendars are empty today. FX direction will be guided by UK politics, oil price movement, Wall Street.
USDCAD Technical View
The USDCAD technicals are bearish. The break of support at 1.3180 suggests a short-term high is in place at 1.3240, opening the door to a revisit of the July low of 1.3010. For today, USDCAD support is at 1.3140 and 1.3110. Resistance is 1.3180 and 1.322. Today’s Range 1.3140-1.3220
Chart: USDCAD 4 hour
Source: Saxo Bank