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Canadian Dollar Update January 3, 2020 – Canadian Dollar drifts lower

USD/CAD Open: 1.2979-1.2980, Overnight Range: 1.2961-1.3005

Oil is at $63.38 and gold is at $1,551.40. US markets are lower today.

The short-term USD/CAD technicals are neutral-bullish. For today, USD resistance is at 1.3016. Support is at 1.2968.

The Canadian dollar flirted with resistance yesterday but was unable to make any additional gains.

Fears that crude shipments through the Strait of Hormuz would be disrupted stoked fears of oil shortages, especially after OPEC and Russia cut crude production quotas at the beginning of December. West Texas Intermediate soared on the news, rising from $61.17 to $64.05 overnight. Prices have eased to $63.43 in Toronto.

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EURUSD extended yesterday’s losses, dropping to 1.1126 from 1.1177 before rebounding to 1.1142 in Toronto trading. EURJPY selling weighed on the currency pair. Traders are patiently waiting for this afternoon’s release of the Federal Open Market Committee minutes from the December 11 meeting. They are hoping to get some clarification on the Fed’s monetary policy outlook for 2020.

GBPUSD sank to 1.3056 from 1.3159 before rallying to 1.3090 in Toronto trading. Widespread US dollar selling combined with ongoing nervousness around UK politics and Brexit, in addition to holiday reduced liquidity contributed to the choppy price action.

The Canadian dollar is benefitting from the jump in oil prices, but to a lesser degree than in the past due to pipeline constraints in Alberta. The currency is also supported by sentiment that the Bank of Canada has shifted to a more hawkish, than dovish monetary policy. Bank of Canada Deputy Governor is speaking today.

The US December ISM Manufacturing PMI index is due today. Some analysts expect an upside surprise to the forecast of 49.0 which if correct will underpin the US dollar. There are not any Canadian economic reports today.

Today’s Suggested Range USD/CAD: 1.2930 – 1.3030

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By KBFX | January 3, 2020 | Daily Update | 0 comments