Canadian Dollar Update August 30, 2019 – Canadian Dollar bids “Adieu” to August
USD/CAD Open: 1.3286-1.3287 Overnight Range: 1.3246-1.3311
Oil is at $56.47 and gold is at $1,536.10. US markets are higher today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3292. Support is at 1.3232.
The Canadian dollar is finishing August as the best performing commodity bloc currency compared to the greenback. It lost 0.58% from its August 1 opening level and today’s open. That was a stellar performance when compared to the New Zealand dollar, which shed 4.0% of its value. NZDUSD was hammered when the Reserve Bank of New Zealand slashed interest rates by 0.50% to 1.00% on August 7.
The Japanese yen and Swiss franc posted gains due to a wave of risk aversion sentiment that permeated FX markets for most of the month. The British pound gains were due to UK politics with some traders believing that all the bad news for the currency is reflected in the current prices.
Asia FX markets were busy. Weaker than expected Building Permits data knocked NZDUSD lower in early trading, but prices recovered most of their losses in Toronto trading. AUDUSD had a similar experience. Soft Australia Building Permits data undermined the currency pair early, but it managed to recoup most of the losses by the start of trading in Toronto.
USDJPY bounced erratically in a tight trading band with prices supported by a steepening of the US Treasury yield curve. Japanese economic data releases had a short-lived impact.
EURUSD inched lower overnight and is trading at the session lows. There is a negative bias due to improved risk sentiment following the improved US/China trade talk tone. Concerns that the ECB will introduce new monetary policy stimulus in September will cap gains.
The Canadian dollar was largely ignored in overnight markets and is currently trading where it closed yesterday. Traders are looking ahead to today’s Canada GDP, Raw Materials and Industrial Price data. GDP is the most important. Q2 GDP is forecast to rise 3.0% q/q while June GDP is expected to rise 0.1%. Stronger than expected data will boost the currency. However, broad US dollar demand and month-end portfolio rebalancing flows may limit Canadian dollar gains.
There is a host of US data available today including, PCE, Chicago PMI and the Michigan Consumer Sentiment Index. Better than expected data will underpin the greenback as it reduces the incentive for the Fed to cut interest rates aggressively.
FX traders will be looking to get an early start to the long weekend holiday in the US and Canada. The first week of September will be busy. The Bank of Canada policy meeting is Wednesday while US and Canadian employment reports are due Friday.
Today’s Suggested Range USD/CAD: 1.3240 – 1.3340
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