Canadian Dollar Update August 13, 2019 – Canadian Dollar tracking greenback
USD/CAD Open: 1.3237-1.3238 Overnight Range: 1.3222-1.3294
Oil is at $56.22 and gold is at $1,509. US markets are mixed today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3342. Support is at 1.3127.
The Canadian dollar underperformed its antipodean cousins against the US dollar, overnight. AUDUSD and NZDUSD managed to squeeze out tiny gains while the Loonie inched lower. The Australian dollar got a boost from slightly better than expected Business Confidence survey data despite the Business Conditions survey being a tad soft. Reserve Bank of Australia Deputy Governor Christopher Kent’s comments helped support the currency. He said that although unconventional monetary policies were possible, they were unlikely because recent rate cuts should do the job. NZDUSD traded higher, but the gains lagged that of the Aussie dollar.
Risk aversion fears flitted throughout markets overnight, carrying forward from developments in America. Argentina political concerns stemming from the performance of its center-right leader, Mauricio Macri, in the first round of elections is seen as a rejection of his austerity policies. Argentina’s stock market and currency plunged. Wall Street got spooked and sold off, ending the day with steep losses in the major indices.
Asia traders picked up the ball and ran with it. The Nikkei and Hang Seng indices plunged. Hong Kong’s protests and fears about how China will respond alongside ongoing US/China trade tensions fueled the fears.
The safe-haven currencies, Japanese yen, and Swiss franc rallied. USDJPY losses were exacerbated by sliding US Treasury yields. The ten-year Treasury yield dropped from 1.693% to 1.625% before inching higher.
European traders are keeping an eye on Italian politics. There is a risk that the incumbent government will fall to a no-confidence vote on August 20 which puts the anti-Euro, right-wing parties in the spotlight, again. EURUSD gains in early Toronto trading met downtrend line resistance in the 1.1220-30 area. Expectations for new monetary stimulus from the European Central Bank in September are capping gains, as are bearish technicals. Eurozone ZEW Sentiment surveys (Current Situation and Economic Sentiment) were below expectations. German Inflation data was as expected.
GBPUSD is consolidating recent losses in a 1.2000-1.2100 range. Prices were supported today after the UK employment report showed average earnings, excluding bonus, rose 3.9% compared to the forecast for a 3.8% gain. However, increased risks for a “no-deal” Brexit limited gains.
Oil prices have traded erratically in a wide $51.00-$56.00 so far in August. Traders are concerned that the US/China trade war will limit global demand while OPEC price support mechanics are offset by rising US crude production.
The Canadian dollar is tracking broad US dollar moves and will continue to do so for the rest of the week. There are not any domestic economic reports available, leaving the currencies direction at the whim of risk sentiment.
US CPI is due today and expected to rise by 0.3% m/m in July compared to June’s 0.1% gain.
Today’s Suggested Range USD/CAD: 1.3180 – 1.3280
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