Canadian Dollar Update December 10, 2019 – Canadian Dollar parked
USD/CAD Open: 1.3239-1.3240, Overnight Range: 1.3224-1.3249
Oil is at $59.28 and gold is at $1,467.40. US markets are higher today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3256. Support is at 1.3210.
The Canadian dollar is parked. It has yet to recover following Friday’s post-US and Canadian employment report sell-off, but upside momentum has stalled. Traders are patiently awaiting the results of tomorrow’s Federal Open Market Committee meeting. The surprisingly strong US employment data suggests the FOMC will stick to Fed Chair Jerome Powell’s mantra that the “economy is in a good place.” Interest rates are universally expected to remain unchanged at 1.75%. Furthermore, if the Fed believes that a Phase 1 trade deal announcement is imminent, the statement could be a tad hawkish, sparking a US dollar rally. If so, the Canadian dollar would suffer.
There has been a slew of US/China trade news. A Chinese official said that Chinese imports of US soybeans between September and November are 18 times higher than in the same period last year. Even better, China has issued new tariff-free import permits for soybeans for January. President Trump has been touting increased Chinese agricultural imports as a pathway to a trade deal, and it appears he is getting his way. In fact, on Monday, Trump said the US is doing well with China with respect to a new deal, giving rise to expectations that the proposed December 15 tariff increase will be delayed.
Canadian dollar losses may have been reduced because of the surge in oil prices. West Texas Intermediate (WTI) rose to $59.38/barrel overnight, mainly because of lingering demand from the OPEC and Russia decision to increase oil production cuts. However, concerns around a more prolonged US/China trade dispute led to profit-taking selling and a drop to $58.59/barrel in early Toronto trading.
In Europe, EURUSD jumped to 1.1084 from 1.1064 after German and European ZEW survey data was better than expected. German ZEW Economic Sentiment index surged to 10.7 from -2.1 in November, the highest level since February. The Eurozone result was similar. Prices inched lower in early Toronto trading as positions were adjusted ahead of the FOMC meeting Wednesday.
GBPUSD rose to 1.3188 from 1.3134 despite a series of soft economic reports. Oct GDP growth was flat. A dip in Industrial Production was offset by Manufacturing Production rising a tick better than forecast. However, traders only have eyes for the UK election, which happens on Thursday. The polls are predicting a majority for Boris Johnson’s Conservatives; however, others question the accuracy of the estimates due to a large number of “undecided” voters.
Today’s US data will be a non-event for FX markets.
Today’s Suggested Range USD/CAD: 1.3190 – 1.3290