Canadian Dollar Update February 24, 2020 – Canadian Dollar drops with oil
USD/CAD Open: 1.3252-1.3253, Overnight Range: 1.3241-1.3307
Oil is at $51.20 and gold is at $1,674.40. US markets are lower today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3314. Support is at 1.3230.
The Canadian dollar plunged overnight, following a 4.2% drop in West Texas Intermediate oil prices.
A steep jump in the number of coronavirus cases outside of China, with South Korea and Italy reporting a sharp increase in COVID-19 cases, sparked fears of a pandemic. The Canadian dollar, alongside its commodity currency bloc cousins, the Australian and New Zealand dollars were sold aggressively.
NZDUSD losses were exacerbated by mixed to soft retail sales reports. NZDUSD dropped to 0.6306 from 0.6342 while AUDUSD fell to 0.6587 from 0.6622.
USDJPY sank on the back of fresh risk-aversion sentiment and soft US Treasury yields. However, the losses were shallow, and prices stayed well above last week’s low. USDJPY continues to be supported by the outperformance of the US economy compared to Japan, and greenback demand as Japanese investors sell JPY to buy US assets.
EURUSD is in a similar boat as the Japanese yen. Eurozone growth is anaemic. The single currency is also suffering from a spike in risk aversion sentiment as Italy now has over 200 confirmed coronavirus cases. EURUSD dropped from 1.0850 to 1.0806 on the news but bounced to 1.0820 when German IFO Survey results were better than expected.
GBPUSD is trading at 1.2904, just above its overnight low of 1.2888, with prices tracking EURSD movements.
There wasn’t any UK data of note, but prices may get a bit of support when government officials outline their US trade negotiation objectives.
Canada December Retail Sales for December was flat. The data, released on Friday, was as expected and gave the domestic currency a bit of a lift. However, other domestic developments limited the currency’s upside.
RBC economists predict that the rail blockade in Canada could knock 0.2% of Q1 2020 GDP growth if it persists.
There are not any US economic reports of note today, leaving equity markets to provide FX direction. Fears of a coronavirus pandemic fueled stock market losses in Europe and US equity futures point to an ugly open for Wall Street.
Today’s Suggested Range USD/CAD: 1.3200 – 1.3300