Canadian Dollar Update July 15, 2019 – Canadian Dollar consolidating, quietly
USD/CAD Open: 1.3025-1.3026 Overnight Range: 1.3020-1.3051
Oil is at $60.65 and gold is at $1,413. US markets are higher today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3050. Support is at 1.3002.
The Canadian dollar is consolidating last week’s gains in a quiet start to the week. The currency benefitted from Fed Chair Jerome Powell’s dovish testimony to the US Congress. The combination of Powell’s remarks and the minutes of the June 19 Federal Open Market Committee meeting reinforced market sentiment that not only were US rates being cut on July 31, but another rate cut may follow, as early as September.
President Trump has been a vocal critic of Mr. Powell and the Fed’s monetary policy. The President may be trying to neutralize Mr. Powell by his nomination of two dovish candidates to the Fed board. Dovish Fed concerns led to widespread US dollar selling last week, and the greenback is modestly softer in early Toronto trading this morning.
In Asia, a slate of China economic reports gave AUDUSD and NZDUSD a boost. China Q2 GDP rose 1.6% q/q, surpassing expectations for a 1.5% gain, and June Retail Sales rose 9.8%, compared to 8.3% which was predicted. However, Producer and Import Prices were down 0.5%, slightly tarnishing the day’s data.
USDJPY was confined to a tight 107.81-108.10 range as Japan was closed for a holiday. Prices were undermined by a modest retreat in US Treasury yields.
EURUSD hovered around major resistance in the 1.1270 area. Traders are torn between buying the single currency because of the dovish Fed outlook and selling it due to fears of renewed monetary easing by the European Central Bank.
GBPUSD rallied last week after failing to break support at 1.2440. However, that rally has stalled under the weight of ongoing “no-deal Brexit” concerns. The outlook is muddled due to leadership changes in the EU and the UK.
Traders are keeping a close eye on European Union efforts to save the Iran nuclear deal. The United States unilaterally revoked the deal after accusing Iran of treaty violations, which Iran denied. Iran has suggested it would resume complying with the original terms if it can continue to sell its oil on the global market. Traders fear that the negotiations could go “pear-shaped” triggering an oil crisis and shift into safe-haven currencies.
Iran/US tensions have underpinned oil prices. West Texas Intermediate (WTI) is trading in Toronto at $60.36/barrel, just below its overnight peak. Prices got an added boost from supply disruption concerns stemming from Tropical Storm Barry which shut down several US drilling rigs.
The US and Canadian data calendars are empty today. Canadian dollar price action will be dictated by broad US dollar and WTI price moves.
Today’s Suggested Range USD/CAD: 1.2980 – 1.3080
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