Canadian Dollar Update January 20, 2020 – Canadian Dollar idled
USD/CAD Open: 1.3057-1.3058, Overnight Range: 1.3053-1.3072
Oil is at $58.60 and gold is at $1,560.50. US markets are higher today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3077. Support is at 1.3041.
The Canadian dollar started the week at the same price, it ended the previous week, even though the US dollar inched higher against the major G-10 currencies. The US gains were not impressive but were an indication of the underlying market sentiment.
There is plenty of domestic data on tap for Canadian dollar traders headlined by Wednesday’s inflation report. December CPI is expected to rise 2.1% y/y compared to a 2.2%y/y increase in December, while Core CPI is forecast to be unchanged at 1.9% y/y. Oil price fluctuations will be blamed for forecast deviations, thus diminishing the impact of this report on Canadian dollar trading. It will also be overshadowed by the release of the Bank of Canada monetary policy statement and quarterly Monetary Policy Report ninety-minutes later.
FX price action was somewhat muted overnight, in part because US markets are closed for Martin Luther King Day and traders didn’t want to get too involved.
USDJPY traded sideways in a tight 110.05-110.20 range with traders’ content to await the Bank of Japan monetary policy decision due tomorrow. The BoJ is widely expected to leave interest rates unchanged, but there is a risk of growth and inflation forecast downgrades.
The Australian dollar continues to trade with a negative bias. Traders are waiting for the release of the Australian employment and inflation reports on Thursday. Both reports are forecast to be a tad softer than the previous data which could empower Aussie bears.
GBPUSD gapped lower at the Asia open, following comments by the Chancellor of the Exchequer Sajid Javid. Mr. Javid warned that the UK would not align itself with EU rules, saying “there will not be alignment, we will not be a rule taker.” The comment stoked fears of a hard Brexit and GBPUSD dropped to 1.2964 in Asia but have since recovered and are trading at 1.2995 in Toronto.
Concern about a hard Brexit roiled EURUSD as well. The single currency fell from 1.1101 to 1.1083 and is hovering just above that level in Toronto. Traders are looking ahead to Thursday’s European Central Bank meeting, although the expectations for any market-moving revelations are meager.
The annual World Economic Forum in Switzerland begins today. There will likely be some headlines as the International Monetary Fund will present its World Economic Outlook.
There are not any Canadian economic reports available today, and with US markets closed, it suggests a tranquil session ahead.
Today’s Suggested Range USD/CAD: 1.3010 – 1.3110
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