Canadian Dollar Update January 7, 2020 – Canadian Dollar shows resilience
USD/CAD Open: 1.2964-1.2965, Overnight Range: 1.2957-1.3024
Oil is at $62.70 and gold is at $1,572.20. US markets are lower today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3051. Support is at 1.2978.
The Canadian dollar demonstrated its resilience overnight. The US dollar squeezed out gains against the major G-10 currencies, yet USDCAD managed to remain below the psychologically important 1.3000 level.
The spike in West Texas Intermediate oil prices that followed news of the US-Iran situation is rapidly unwinding, which may limit Canadian dollar upside from current levels. WTI prices topped out at $63.90/barrel yesterday and are trading in Toronto at $62.71/b.
China’s Minister for Agriculture and Rural Affairs said China would not raise quotas for the import of grains. If true, it may hamper Beijing’s ability to purchase the $80.0 billion in US agriculture products required by the Phase 1 trade deal.
Asia FX markets opened with a mild risk-off tone, which did not last the session. The major equity indices closed with solid gains. The Australian dollar was the worst-performing major G-10 currency against the US dollar, losing 0.88%. Weaker than expected Australian data and sales of AUDJPY fueled the losses.
USDJPY rallied from 108.28 to 108.49 with prices supported by a rise in US Treasury yields and gains in the Nikkei 225.
EURUSD direction is undecided. The single currency bounced in a 1.1166-1.1196 band. Better than expected Eurozone November retail sales data supported prices as did the preliminary inflation data for December, which showed CPI at 1.3% y/y, as expected.
GBPUSD is trading at 1.3118, near the bottom of its overnight 1.3104-1.3210 range. The currency pair continues to unwind the gains following the UK election, but prices remain in an uptrend while trading above 1.3090.
The Canadian dollar is struggling to extend its recent rally. Weaker than expected Canadian Merchandise trade data, noting softer exports, didn’t do anything to incite fresh demand. The Canadian Ivey PMI report is due later today and is forecast to drop to 53.8 from 60.0. Significant deviations from the forecast usually lead to some Canadian dollar trading volatility, even though many Bank economists ignore the results.
Today’s Suggested Range USD/CAD: 1.2920 – 1.3020