Canadian Dollar Update August 28, 2019 – Canadian Dollar bulls get sideswiped
USD/CAD Open: 1.3281-1.3282 Overnight Range: 1.3275-1.3318
Oil is at $56.40 and gold is at $1,545.40. US markets are mixed today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3321. Support is at 1.3287.
Canadian dollar bulls were sideswiped yesterday. Canadian dollar technicals which had just turned bullish on Monday, flipped to bearish again, yesterday. The bearish sentiment intensified following fresh US recession concerns. Financial markets have been watching the US yield curve closely after it inverted a few times in the past couple of weeks. The US 2-year/10-year yield curve inverted again, Tuesday, and it is still inverted today.
Those concerns fueled small US dollar gains against the G-10 majors in an otherwise quiet FX session, due to an absence of top-tier economic data. The British pound was the exception. GBPUSD collapsed after UK Prime Minister Boris Johnson announced his intention to suspend parliament.
UK politicians are on their summer recess until September 3. Sometime in the two-weeks following the start of the new session, the Prime Minister will prorogue parliament until October 14. In a letter to MP’s, Mr. Johnson promised to “bring forward a new, bold and ambitious domestic legislative agenda for the renewal of our country after Brexit.” Naturally, the Opposition Parties are outraged. The Speaker of the House John Bercow described the move as “constitutional outrage.” Scotland’s First Minister said it was a dictatorship. FX traders saw a selling opportunity. GBPUSD plunged from 1.2280 to 1.2157. Profit-taking boosted GBPUSD to 1.2220 in early Toronto trading as the currency pair consolidates its losses.
Elsewhere, the FX markets were far less exciting. AUDUSD traded with a negative bias after the dovish statements from Reserve Bank of Australia Deputy Governor Guy Debelle yesterday and weaker than expected economic data today.
The yield curve inversion weighed on USDJPY prices which traded with a negative bias inside a narrow band. USDJPY continues to be pressured by lingering safe-haven demand for yen, dovish Bank of Japan comments and concerns around the US/China trade war.
While at the G-7 meeting in France, President Trump suggested that US/China trade talks would resume. However, traders are not overly-eager to jump on the bullish trade bandwagon. Asia equity traders weren’t. The major equity indices closed on a mixed note, and the European bourses are in the red.
EURUSD is trapped in a narrow range which could change on Thursday after the release of Eurozone consumer and Business Confidence data as well as German inflation.
There are not any top tier economic data reports from Canada or the US today.
Today’s Suggested Range USD/CAD: 1.3230 – 1.3330
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