Canadian Dollar Update July 18, 2019 – Canadian Dollar looking for direction
USD/CAD Open: 1.3078-1.3079 Overnight Range: 1.3042-1.3082
Oil is at $56.61 and gold is at $1,418. US markets are lower today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3085. Support is at 1.3041.
The Canadian dollar is looking for direction. The currency has been stuck inside a 1.3010-1.3090 range for the past week and even yesterday’s Canadian inflation report didn’t garner much price activity. June CPI came in close to expectations but remained at the Bank of Canada’s target range. The news should have kept the focus on Canadian dollar upside as it supports the view that the Bank of Canada need not hurry to adjust monetary policy from its current neutral stance.
Elsewhere, the US dollar came under selling pressure sparked by the latest report from the International Monetary fund. The IMF said that the greenback was overvalued by 6% to 12% based on near-term economic fundamentals and that gave traders an excuse to sell greenbacks.
The US dollar started sliding and continued to do so overnight, opening in Toronto with losses across the board, against the major G-10 currencies. The only exception was the Canadian dollar, which opened at the same level as yesterday.
The Australian dollar rallied following the release of employment data. Australia ‘s employment change was flat, and the unemployment rate was unchanged at 5.2%. However, the good news was a 21,100 increase in full-time jobs, and that was enough to trigger AUDUSD demand. However, the report was not strong enough to counter fears of additional interest rate cuts and the rally stalled at 0.7037. The New Zealand dollar rallied alongside AUDUSD supported by broad US dollar weakness.
USDJPY extended Wednesday’s losses in Asia and Europe. Prices were undermined by a drop in US Treasury yields and the IMF story. However, prices staged a rally in early Toronto trading today, but the move was short-lived.
EURUSD chugged higher during the overnight session, but the rally came off the rails after a report that the European Central Bank may adjust its inflation goal. Bloomberg reported that the ECB might be considering replacing inflation targets with price-level targeting. EURUSD collapsed from 1.1243 to 1.1205. They have since recovered to 1.1220.
GBPUSD was the biggest mover thanks to US dollar weakness, Brexit news and economic data. UK Retail Sales was surprisingly strong in June rising 1.0% compared to the forecast for a 0.3% decline. GBPUSD rallied and then got an added boost after the UK House Speaker accepted an amendment for a vote on preventing the next Prime Minister from shutting parliament to force a “no-deal” Brexit.
Today’s US data includes Jobless Claims and the Philadelphia Manufacturing Index. Also, Wall Street developments may impact FX sentiment as Q2 earnings reports get released.
Today’s Suggested Range USD/CAD: 1.3030 – 1.3130
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