Canadian Dollar Update, August 12, 2020 – Canadian Dollar stuck in a rut
USD/CAD Open: 1.3292-96, Overnight Range: 1.3229-1.3347
WTI Oil is at $42.33 and gold is at $1,950.60. US markets are higher today.
For today, USD resistance is at 1.3270. Support is at 1.3204.
• Gold (XAUUSD) sinks then soars
• UK Q2 GDP drops 21.7%, lowest in history
• US dollar soars then sinks in thin markets
The Canadian dollar had a wild twenty-four hours, but when then the dust settled, USDCAD opened today right where it opened yesterday. USDCAD bounced erratically in a 1.3270-1.3348 range since Tuesday’s NY open with prices tracking US dollar moves against the major currencies. The domestic economic calendar is empty and will stay that way for the rest of the week.
Canadian dollar traders are ignoring oil prices. West Texas Intermediate, (WTI) the North American benchmark, is directionless in a $41.20-$43.50 range which has contained prices since August 4. Saudi Aramco’s forecast of rising demand for the rest of 2020 helped.
Gold trading was volatile overnight. XAUUSD dropped from its closing level of $1,911.62 to $1863.50 then soared to $1,949.31 during the Asia session. Profit-taking triggered stop losses and drove prices lower while opportunistic gold bulls took prices higher.
NZDUSD dropped from 0.6576 to 0.6526 following the Reserve Bank of New Zealand policy meeting. The central bank was expected to be dovish, and they managed to surpass those expectations. They left the Overnight Cash Rate (OCR) unchanged at 0.25%, increased their quantitative easing purchases from NZD 60.0 million to NZD 100 million, and tweaked their growth forecast higher. The crushing blow came when Governor Adrian Orr said: “ the MPC had expressed a preference for considering a package of a negative OCR and a ‘Funding for Lending Programme’ in addition to the current Large Scale Asset Purchase (LSAP) programme.”
Despite the bearish sentiment, NZDUSD rallied in Europe, alongside widespread US dollar selling pressures on the back of improved risk sentiment.
GBPUSD traders dismissed the day’s data dump and prices were directionless in a 1.3019-1.3066 range.
The UK economy suffered its worst recession ever with Q2 GDP falling 20.4% q/q. Traders didn’t care. The result was expected due to all the measures taken to combat the coronavirus pandemic.
EURUSD remains rangebound.
The well defined 1.1700-1.1900 range contained prices since the beginning of August. Prices continue to consolidate earlier gains following last month’s European Central Bank and European Union meetings. The actions taken by both groups sparked forecasts that Eurozone growth would outperform US growth, especially since the Americans have bungled the coronavirus management.
US inflation data is due today. It won’t be a factor for FX traders.
Today’s Suggested Range USD/CAD: 1.3240 – 1.3340