Canadian Dollar Update August 26, 2019 – Canadian Dollar steady
USD/CAD Open: 1.3292-1.3292 Overnight Range: 1.3284-1.3319
Oil is at $55.06 and gold is at $1,541.70. US markets are higher today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3321. Support is at 1.3278.
The Canadian dollar was steady even as trade tension turmoil roiled FX markets. Friday, China and the US traded a fresh round of tariffs with each other. China, retaliating to the US September 1st tariffs, announced levies of their own. Beijing said it would place new import duties on $60 billion of US imports, impacting over 5,000 products.
President Trump took umbrage at China’s actions and announced new tariffs of his own.
Financial markets certainly paid attention. Wall Street stocks got hammered and US Treasury yields plummeted. Safe-haven currencies were in demand. The Japanese yen, Swiss franc and Euro surged as did gold prices.
Asia markets followed suit when they opened today. Japan’s Nikkei 225 index fell 2.17% leading all Asian bourses lower. USDJPY gapped lower at the start of trading, dropping from 105.43 to 105.46. AUDUSD and NZDUSD dropped on the back of the new trade tensions.
Sentiment changed in Europe. Safe-haven trades were unwound with news that the US and Japan agreed to a trade deal. Trading shifted into high gear when Trump tweeted “Great respect for the fact that President Xi & his Representatives want “calm resolution.” So impressed that they are willing to come out & state the facts so accurately. This is why he is a great leader & representing a great country. Talks are continuing!”
Friday’s trade worries became Monday’s trade hopes. The Japanese yen and Swiss franc gave up a large part of their gains, and US Treasury yields rebounded to 1.518% from 1.449% in Asia. Gold prices retreated from their $1,555.00 peak, and West Texas Oil (WTI) rallied to $54.96/barrel from $53.97.
President Trump made the Biarritz G-7 meeting all about him. The world leaders scrambled to gain “face-time” with the American president and the G-7 agenda was forgotten.
European economic data undermined EURUSD. The German IFO survey was weaker than expected and helped drive EURUSD from 1.1163 to 1.1116 in early Toronto trading.
The Canadian dollar traded sideways in a USDCAD range of 1.3288-1.3317. The Bank of Canada’s neutral monetary policy stance is supporting the currency and offsetting broad US dollar strength from risk aversion sentiment.
The US Durable Goods report and Wall Street price action will dictate FX direction today.
Today’s Suggested Range USD/CAD: 1.3250 – 1.3350