USDCAD Open (6:00 am) 1.3324-27 Overnight Range 1.3308-1.3335
The UK is four day’s past its original EU expiry date. Still, MP’s cannot make a decision beyond agreeing that they don’t like Theresa May’s Brexit plan. Last night, politicians rejected four motions attempting to find a compromise to May’s plan. Today, the EU chief Negotiator Michel Barnier said a “no deal” Brexit is more likely day after day. GBPUSD dropped from 1.3112 to 1.3026 and is trading in New York at 1.3050.
In Asia, the Reserve Bank of Australia left interest rates unchanged at 1.50% which was expected. The statement was cautiously dovish, concerned about protracted weakness in real household income. They left the door open to a rate cut saying “The low level of interest rates is continuing to support the Australian economy.” AUDUSD spiked to 0.7128 and then dropped to 0.7066 when the statement was released. NZDUSD fell from 0.6808 to 0.6766 when Business Confidence was weaker than expected.
The rest of the G-10 major currencies traded quietly inside narrow bands although the bias was for a stronger US dollar. The parade of dovish sounding ECB speakers continued, and modestly soft Eurozone PPI data didn’t help EURUSD sentiment.
The USDJPY rally stalled in the 111.50 area, in part because the rally in US Treasury yields petered out.
WTI oil price continued to climb, and pushed above the $62.00/barrel level in Asia, reaching $62.17/b before slipping to $62.11 in New York trading. Prices continue to be supported by expectations that Iran and Venezuela sanctions will exacerbate Opec supply cuts.
US Durable Goods are expected to fall 1.8%, with a drop in Boeing orders getting the blame. Price. There aren’t any Canadian data reports due today.
USDCAD traders took note of the soaring crude prices and smacked bids. They also got a helping hand from Bank of Canada Governor Stephen Poloz. The Governor delivered a cautious, somewhat dovish speech which failed to fully mask an under-current of hawkishness. Still, it didn’t offer anything new saying that the data is “consistent with a transitory slowdown” but “stimulus is still needed.” USDCAD dropped following the speech, falling from 1.3350 to 1.3298. However, broad US dollar strength supported prices, and USDCAD consolidated in a 1.3306-1.3335 range overnight.
The intraday USDCAD technicals are bearish while prices are below 1.3380, supported by yesterday’s break of support at 1.3330 which targets 1.3250 and then 1.3290. Prices are currently trading at the the 100 day moving average (1.3319). A decsive move below this level targets the 200 day moving average which is sitting at 1.3193. A break above 1.3380 would negate the downside pressure and shift the focus to 1.3550. For today, USDCAD support is at 1.3305 and 1.3260. Resistance is at 1.3340 and 1.3380. Today’s Range 1.1.3270-1.3340
Chart USDCAD daily with moving averages