Canadian Dollar Update January 10, 2020 – Canadian Dollar soft on Poloz comments
USD/CAD Open: 1.3055-1.3056, Overnight Range: 1.3029-1.3075
Oil is at $59.07 and gold is at $1,559.20. US markets are higher today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3078. Support is at 1.3018.
The Canadian traded with a negative bias yesterday and consolidated those losses overnight. The Bank of Canada Governor held another one of his “fireside chats” in Vancouver yesterday. His remarks were pretty tame, but not everyone agreed. Some traders felt they were a tad more dovish than expected, especially when he said: “plenty of uncertainty remains around the implications of the US-China agreement for Canadian exports and around whether any more of the new tariffs can be rolled back.” The Canadian dollar dropped with USDCAD rising from 1.3040 to 1.3103, but prices retreated into the close.
The US dollar is poised to finish the week with gains against the major G-10 currencies, led by a 1.48% rally against the Japanese yen. The Canadian dollar languished in the middle of the pack, losing 0.79% since the Toronto open on Monday.
Gold and oil prices have reversed their entire gains following the US-Iran tensions. The Australian dollar was the biggest mover overnight, and the only currency to gain against the USD dollar. AUDUSD climbed to 0.6881 from 0.6852 after November retail sales rose 0.9% m/m compared to the 0.4% forecast. AUDUSD could extend gains further if today’s US employment report is disappointing.
US nonfarm payrolls are expected to see some “payback” after the November data surprised to the upside with a gain of 266,000 new jobs. Forecasters are predicting 164,000 jobs for December. If the results are as expected or lower, it will reinforce the Fed’s “steady as she goes” monetary policy outlook.
Canada employment is also on tap. Analysts are also looking for payback. Canada lost 71,200 jobs in November. Those results may have been skewed by the impact of the October election. The forecast is for a gain of 25,000. The combination of weak domestic results and a robust US NFP print would sink the Canadian dollar.
FX markets were relatively quiet in Europe. GBPUSD saw a bit of excitement following comments from Bank of England policymaker. They said they would be inclined to vote for a rate cut if the economy remains sluggish and believes that the economic risks are tilted to the downside.
EURUSD traded in a narrow band and is sitting near the bottom of its overnight range in early Toronto trading. Dovish ECB monetary policy and bearish technicals are weighing on the currency.
USDJPY continues to be supported by safe-haven trade unwinding and firm US Treasury yields. However, failure to break resistance in the 109.80 level may spark a profit-taking sell-off.
The Canadian and US employment reports will dictate FX market direction today.
Today’s Suggested Range USD/CAD: 1.3005 – 1.3105