Canadian Dollar Update January 27. 2020 – Canadian Dollar suffering from oil price blues
USD/CAD Open: 1.3153-1.3154, Overnight Range: 1.3148-1.3200
Oil is at $53.23 and gold is at $1,580.80. US markets are lower today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3224. Support is at 1.3146.
Gold prices jumped at the Asia open, rising from Friday’s closing level of $1,571.50/ounce to $1,588.30 before easing down to $1,581.50 in Toronto. Oil prices went the other way. They gapped lower, dropping from $54.21/barrel on Friday to $52.20 today. Oil traders are selling due to fears that the coronavirus will be very harmful to China’s economy and stifle demand for crude. The sentiment is also bearish due to forecasts that global oil supplies will exceed global demand in 2020.
The plunge in West Texas Oil prices sparked Canadian dollar selling, which was exacerbated by broad US dollar demand against the G-10 majors. AUDUSD suffered additional pain as iron-ore prices declined due to China economic growth concerns.
However, a few words of caution. This weekend marked the onset of Chinese New Year holidays. Many Asia markets were closed, including China, Hong Kong, Taiwan, Vietnam, South Korea, Singapore, and Malaysia. Australia was closed for its Australia Day holiday. Price action may be exaggerated as market closures suck out a lot of liquidity from markets.
EURUSD ignored most of the noise in Asia but perked up in Europe. EURUSD opened at its Asia peak of 1.1036, but prices dropped quickly after German economic data was released. The January IFO Survey reported lower than expected results for Business Climate, Current Assessment, and Expectation surveys and EURUSD fell to 1.1020.
Traders are cautious ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting. Analysts do not expect any changes from the FOMC. Fed Chair Jerome Powell is expected to re-affirm that the Fed is on hold for the foreseeable future.
GBPUSD traded sideways in Asia, and then rallied at the European open, climbing from an Asia low 1.3050 to 1.3103, before plunging to 1.3050 in early Toronto trading. The intraday GBPUSD technicals are bearish, and sentiment is negative ahead of Thursday’s Bank of England policy meeting. BoE Governor Carney and a couple of his colleagues delivered dovish speeches earlier in the month, setting the stage for a rate cut. However, recent economic reports suggest that the BoE could be patient, which offset rate cut fears.
There are not any top-tier US or Canadian economic reports available today. FX traders will take direction from equity market prices and coronavirus updates.
Today’s Suggested Range USD/CAD: 1.3100 – 1.3200
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