Canadian Dollar Update December 17, 2019 – Canadian Dollar bounces off ceiling
USD/CAD Open: 1.3149-1.3150, Overnight Range: 1.3145-1.3185
Oil is at $60.81 and gold is at $1,479.20. US markets are higher today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3191. Support is at 1.3140.
The Canadian dollar rallied yesterday but hit a ceiling, which knocked prices lower. Prices continued to fall overnight on the back of broad US dollar strength against the commodity bloc currencies. That strength was most evident in AUDUSD, where prices dropped from 0.6884 to 0.6845. Australian dollar sellers emerged after the minutes of the December 3, Reserve Bank of Australia meeting were released. At the time, the RBA left interest rates unchanged, and analysts believed they would stay that way in the near term. The minutes suggested that wasn’t the case. The central bank maintained its easing bias.
The New Zealand dollar continued to consolidate post-US/China trade deal gains, trading in a 0.6575-0.6603 range, with prices opening at the bottom of that range in Toronto. AUDUSD and NZDUSD selling pressure has undermined the Canadian dollar.
The British pound was center stage overnight. GBPUSD plummeted from 1.3334 to 1.3156 and is hovering just above the low in early Toronto trading. Renewed Brexit fears fueled the selling. UK Prime Minister Boris Johnson said his government would enact a law that would make it illegal to extend the Brexit transition beyond 2020. Analysts are worried that unresolved transition issues would risk a very disorderly exit in December 2020. Thin, pre-Christmas holiday markets acerbated the move as did disappointing UK economic data. The UK Industrial Trends Survey-Orders were -28 compared to -26 in November, m/m. The pain from that data was alleviated by a steady UK employment report.
EURUSD traded with a bid, supported by demand for EURGBP and modestly bullish technicals. The short-term outlook for EURUSD is bullish while prices are above 1.1110, looking for a break above 1.1190 to lead to 1.1250. Better than expected Eurozone Trade data also supported prices.
USDJPY traders ignored the price action elsewhere and the currency pair traded in a narrow 109.50-62 range, in part because US Treasury yields were steady.
FX risk sentiment is mildly positive because of the prospects of a Phase 1 US/China trade deal. Yesterday, White House Economic Advisor Larry Kudrow suggested the deal means US exports to China would double. He also said that Phase 1 would be signed in early January.
Oil traders like the news of the trade deal and the previously announced increased crude production cuts by OPEC and Russia. West Texas Intermediate has managed to hang on to gains above $60.00/barrel in early Toronto trading.
Today, US November Building Permits, Housing Starts, Industrial Production and Capacity Utilization reports are released. Stats Canada releases Manufacturing Shipments.
Today’s Suggested Range USD/CAD: 1.3100 – 1.3200