News image

Canadian Dollar Update August 29, 2019 – Canadian Dollar jumps on China news

USD/CAD Open: 1.3306-1.3307 Overnight Range: 1.3272-1.3318

Oil is at $56.29 and gold is at $1,548.30. US markets are higher today.

The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3348. Support is at 1.3248.

The Canadian dollar popped higher during the European session alongside a mild shift to positive risk sentiment. A spokesman from China’s Ministry of Commerce poured some sugar on the bitter tone of recent US/China trade comments. The spokesman, Mr. Gao Feng said that China would not retaliate when new US tariffs take effect on Sunday. He didn’t say forever, just not immediately. “China has ample means for retaliation but thinks the question that should be discussed now is about removing the new tariffs to prevent escalation of the trade war. China is lodging solemn representations with the US on the matter.” Mr. Feng added that China and the US are holding face-to-face talks in September.

The China story provided a glimmer of hope in an otherwise quiet market and sparked a furor of safe-haven trade unwinding. The Japanese yen and Swiss franc plunged (relatively speaking) with USDJPY touching 106.35 from a low of 105.85. Interestingly, the Yen sank despite the US 2 year/10 year yield curve remaining inverted suggesting US recession fears take a back seat to US/China trade hopes, at least for today. USDCHF climbed from 0.9802 to 0.9841 but slipped to 0.9824 in early Toronto trading.

EURUSD inched lower, albeit in a narrow 1.1070-1.1086 range. A slew of Eurozone and Euro-area economic data reports were a tad on the weak side which weighed on the single currency. More significant data is on tap tomorrow when Eurozone Inflation and Employment reports are released. The single currency didn’t get much in the way of a relief rally after Italy managed to resolve its political crisis. Last week Giuseppe Conte resigned as Prime Minister and yesterday was named Prime Minister.

The British pound had a wild day on Wednesday after UK Prime Minister Boris Johnson suspended parliament. GBPUSD collapsed to 1.2155 from the 1.2280 area on renewed fears that Britain would exit the European Union without a deal. Bottom-fishers emerged, and the currency bounced back to 1.2220 by the end of the day. GBPUSD consolidated the move overnight, trading in a 1.2184-1.2220 band.

In Asia, NZDUSD came under pressure following weaker than expected ANZ Business Confidence data. It exacerbated bearish sentiment due to the Reserve Bank of New Zealand’s dovish monetary policy stance. NZDUSD dropped to 0.6308 from 0.6345 but fully recouped those losses by the Toronto open, thanks to the China story.

West Texas Intermediate oil prices held on to recent gains. WTI climbed to $56.18/barrel from $53.65 after American Petroleum Institute (API) and Energy Information Administration (EIA) reported large declines in weekly crude stocks inventories. Hopes for a better global growth outlook from new US/China trade talks supported prices.

The Canadian dollar is still trapped in a USDCAD 1.3230-1.3350 range, and traders are hoping that Friday’s Canadian GDP data will provide new direction.

Today’s Suggested Range USD/CAD: 1.3260 – 1.3360

Click Here to Subscribe

By KBFX | August 29, 2019 | Daily Update | 0 comments

Leave a Comment

Popular Content