Canadian Dollar Update December 11, 2019 – Canadian Dollar counting down to FOMC meeting
USD/CAD Open: 1.3230-1.3231, Overnight Range: 1.3216-1.3239
Oil is at $58.32 and gold is at $1,475.60. US markets are mixed today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3248. Support is at 1.3208.
The Canadian dollar traded quietly overnight, alongside the rest of the G-10 major currencies. FX traders worldwide are using the event risk stemming from the pending tariff increase on Chinese imports to the US, the Federal Open Market Committee (FOMC) policy meeting today, and Thursday’s UK election, as excuses to stay on the sidelines.
The FOMC meeting should be uneventful. Fed Chair Jerome Powell recently noted that the US economy was in “a good place.” The surprisingly robust nonfarm payrolls report released on December 6 validates that view. The Fed suggested that they were in “wait and see” mode after the last meeting. As the decision to go ahead with a December 15 tariff increase is still up in the air, waiting to see continues to make sense.
FX traders are also awaiting the results of Thursday’s UK election. The British pound traded erratically recently, rising and falling with every poll. That price action was on full display yesterday and overnight.
The Canadian dollar may be getting a bit of “relief” support after news that the US, Mexico and Canada finalized the US Mexico Canada Agreement on trade (USMCA). NAFTA is no more. The Americans think they came out ahead with this deal, and they did. The agreement increased the requirement of the parts of a vehicle to be made in one of the three countries to 75% from 62.5%. GM said it has already shifted production of some cars back to the US. Labour standards were increased, which hurts Mexico. The Canadian dollar gets a bit of support as the risk that President Trump slaps new tariffs on Canadian goods, is significantly reduced.
The seemingly never-ending US and China trade negotiations continue to weigh on FX markets. The US plans to increase tariffs on Chinese imports by 15% on December 15. President Trump said the decision to implement or delay the tariffs is contingent on the progress of a Phase 1 deal. China doesn’t just want the December 15 tariffs delayed; they want all tariffs rolled back. Officials from both sides say they are “close to a deal.”
Today’s Suggested Range USD/CAD: 1.3180 – 1.3280
By Admin | December 11, 2019 | Daily Update |
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