Canadian Dollar Update February 14, 2020 – Canadian Dollar feeling the love
USD/CAD Open: 1.3267-1.3268, Overnight Range: 1.3235-1.3269
Oil is at $52.03 and gold is at $1,585.60. US markets are lower today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3271. Support is at 1.3232.
Love is in the air, and the Canadian dollar is feeling it. The Loonie continues to probe resistance in the 75.50 cent area (US cents per 1 Canadian dollar). The currency is being supported by broad US dollar losses against the other commodity bloc currencies, even though lingering coronavirus fears are underpinning the safe-haven currencies.
The overnight price action was subdued as traders were content to book profits ahead of the US long weekend. US markets are closed on Monday for President’s Day.
The Canadian dollar is deriving a modicum of support from the rebound in oil prices. West Texas Intermediate (WTI) bottomed out at $49.40/barrel on Monday and touched $52.25 overnight, a gain of 5.08%. USDCAD dropped from 1.3325 to 1.3240 during that period. Oil traders are hoping that the China coronavirus will only have a short-lived impact on China’s oil demand, allowing crude prices to rebound. Their optimism may be misplaced as OPEC, and the International Energy Agency (IEA) forecast lower global demand in Q1 2020.
Yesterday’s US inflation data didn’t do anything to shift analysts from their “Steady Fed” view. The Fed expects inflation to rise toward its 2.0% target, and until it does, US rates will remain unchanged.
EURUSD is under pressure.
A spate of weak Euro-area economic data reports underscores the lack of growth in the Eurozone economy, which contrasts sharply, with US economic results. Recent data paints a negative picture of the Eurozone economy.
The German economy is stagnating.
German Q4 GDP rose 0.3%, y/y compared to 1.1% previously. The Eurozone economy grew a mere 0.1% in Q4. That’s the weakest result since 2013. However, Eurozone employment growth ticked higher. EURUSD is in a downtrend with a decisive break below 1.0840, targeting further losses to 1.0770.
GBPUSD consolidated Thursday’s gains in a 1.3021-1.3062 range, overnight. Yesterday’s rally occurred after UK Prime Minister announced a cabinet shuffle, which didn’t include Chancellor Sajid Javid. His resignation and the subsequent appointment of Rishi Sunak sparked GBPUSD demand as analysts suggest he will increase fiscal stimulus. GBPCAD demand contributed to the narrow range seen in Canadian dollar trading.
USDJPY is trading below 110.00 as lingering coronavirus fears and soft US Treasury yields offset broad US dollar demand against the commodity bloc currencies.
The Australian and New Zealand dollars are finishing the week on a positive note. Prices gained steadily until mid-week when they reversed course. NZDUSD still managed to hang on to some of its post-RBNZ monetary policy meeting gains, after the central bank adopted a less dovish outlook.
US Retail Sales and Michigan Consumer Confidence Sentiment data will provide FX traders with direction today. There is a risk of pre-holiday weekend position squaring which could reverse some of this week's moves.
Today’s Suggested Range USD/CAD: 1.3220 – 1.3320
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