Canadian Dollar FX Update May 22, 2019
USD/CAD Open: 1.3392-1.3393 Overnight Range: 1.3357-1.3417
The Canadian dollar was rangebound in overnight currency exchange markets. Oil is at $62.44 and gold is at $1,274. US markets are lower. There are no releases scheduled for today’s session.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3432. Support is at 1.3309.
The Canadian dollar is revisiting the top of its three-week range. There is a slightly improved tone to risk sentiment, which has given the currency a lift. The United States dialed back its "warmongering" rhetoric against Iran which has lowered the risk of an actual "shooting war" breaking out between the two nations. The U.S. is conducting Naval exercises in the Arabian Gulf, in a not so subtle show of strength to Iran.
Yesterday, U.S. Acting Defense Secretary Patrick Shanahan said: "I think our steps were very prudent and we’ve put on hold the potential for attacks on Americans, and that’s what’s extremely important."
West Texas Oil prices retreated following the news. They were further undermined when the American Petroleum Institute said U.S. crude inventories rose 2.4 million barrels in the week ending May 17. Losses were limited by yesterday’s reports that the Organization of the Petroleum Exporting Countries plans on extending their production cuts until the end of 2019.
The Canadian dollar got a bit of a lift when St Louis Fed President James Bullard implied a U.S. interest rate cut could be a possibility. He said, "I am concerned we may have slightly overdone it with our December rate hike, but I was pleased that the committee pivoted."
Markets will get an opportunity to decide if Bullard’s comments have any bearing on reality this afternoon when the minutes from the May 1 Federal Open Market Committee (FOMC) are released. The FOMC statement suggested that domestic growth was strong, noting that economic activity rose at a solid rate and that job gains were solid. Fed Chair Jerome Powell attributed low inflation to "transitory" factors. For many, that comment took the risk of a rate cut in 2019 off the table. Today’s FOMC minutes may help clarify that view.
FX markets traded quietly overnight, and the major G-10 currencies opened in Toronto right around where they finished yesterday’s session.
The exception was the British pound, which has experienced a volatile 24 hours. GBP/USD soared yesterday morning, rising from $1.2695 to $1.2810, ahead of U.K. Prime Minister Theresa May’s speech where she promised to outline her "new" Brexit plan. Her "new" plan was much the same as her "old" plan, and no one was impressed. Many members of her Conservative party said they would vote against it as did the opposition. GBP/USD collapsed to $1.2695 and then extended those losses in overnight and early Toronto trading.
Canadian March Retail Sales data released this morning could give the Canadian dollar and added lift if they are higher than the forecast 1.0%. There isn’t any U.S. data available today.
Today’s Suggested Range USD/CAD: 1.3350 – 1.3450
Rahim Madhavji | Knightsbridge Foreign Exchange | Toll-Free: 1-877-355-5239
Knightsbridge Foreign Exchange has based the opinions expressed herein on information generally available to the public. Knightsbridge Foreign Exchange makes no warranty concerning the accuracy of this information and specifically disclaims any liability for trading decisions based on the opinions expressed and information contained herein. Such information and opinions are for general information only and are not intended to present advice with respect to matters reviewed and commented upon.
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