Canadian Dollar Update July 17, 2019 – Canadian Dollar slides with oil
USD/CAD Open: 1.3069-1.3070 Overnight Range: 1.3043-1.3094
Oil is at $58.07 and gold is at $1,413. US markets are mixed today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3094. Support is at 1.3041.
The Canadian dollar got knocked for a loop yesterday and plunging oil prices was mostly to blame. West Texas Intermediate, the North American benchmark price for crude dropped 4.8%, falling from $60.00/barrel to $57.10/b on reports of somewhat positive developments between Iran and the United States. President Trump’s comments suggesting Iran was ready to negotiate about their missile program fueled the sell-off. Later, Iran said that its missile program was non-negotiable, and that news put a floor under prices.
Better than expected US economic data contributed to the Canadian dollar sell-off yesterday and overnight, in Asia. US Retail Sales rose 0.4% in June, easily beating forecasts for a 0.1% rise, and that suggested the Fed could be more patient with their interest rate outlook.
President Trump’s latest threats to slap tariffs on Chinese imports if the pace of trade talks didn’t pick up, were largely ignored. China added Commerce Minister Zhong Shan to their negotiating team. He is reportedly a hard-liner, which suggests the trade talks will have a very long shelf life.
EURUSD traded choppily in a narrow range. Eurozone CPI rose 1.3% year over year in June, higher than expected, but the news was ignored. Traders are looking ahead to the July 25 European Central Bank monetary policy meeting, concerned that new monetary easing measures may be announced.
GBPUSD stayed under pressure on fears that if (when) Boris Johnson wins the Tory leadership contest to become the next British Prime Minister, he will call an early election. Mr. Johnson’s latest comments about scrapping the Irish border deal are viewed as ensuring a “no deal” Brexit is a certainty. Today’s slate of UK data reports, (Retail Price Index, DCLG House Price Index, PPI, and CPI) were mixed and only had a limited impact on GBPUSD trading.
Canada inflation data is released today. Analysts expect June CPI to rise 2.0% year over year, compared to 2.4% y/y seen last month. The BoC expected inflation to fall, so if the forecasts for today’s data are accurate, it won’t be a surprise to them. However, at 2.0%, CPI is at the BoC’s target, which reduces the need for lower rates, and that may stimulate Canadian dollar demand.
Today’s Suggested Range USD/CAD: 1.3020 – 1.3120
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