Canadian Dollar Update July 2, 2019 – Canadian Dollar suffers from broad US dollar strength
USD/CAD Open: 1.3123-1.3124 Overnight Range: 1.3112-1.3138
Oil is at $58.53 and gold is at $1,395. US markets are lower today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3169. Support is at 1.3085.
Canadian FX traders returned to their desks after the Canada long weekend to find the Canadian dollar about 0.25% weaker than where they left it on Friday. It wasn’t the only major G-10 currency pair to suffer a loss. The rest of the majors suffered a similar fate led by the 1.15% drop in the Swiss franc.
The currency moves are despite the positive progress being made between the US and China on the trade war front. President Trump and China President Xi Jinping agreed to resume talks with both sides offering up some concessions. Trump delayed the imposition of new tariffs and appeared to have reversed his stance on Huawei Technologies. China said it would end ownership limits for foreign investors in the financial sector and open its manufacturing and auto sectors.
The FX reaction to the US/China trade news was somewhat subdued, on Monday, in part because Trump reopened his EU trade feud. Once again, he threatened sanctions on $4.0 billion of EU imports because of EU subsidies to aircraft manufacturers and parts makers. EURUSD slid from 1.1360 on Monday to 1.1276 in Asia on Tuesday before climbing to 1.1300 in early Toronto trading. Weaker than expected Eurozone Producer Price Index data also weighed on the single currency.
GBPUSD touched 1.2735 on Friday following a wave of month-end portfolio rebalancing demand. It then retreated steadily until finding a temporary floor at 1.2608 in London this morning, profit taking, a negative bias around the UK leadership race. Soft domestic data undermined the currency pair. UK Construction PMI data was weaker than expected.
The long-awaited OPEC and Russia meeting finished Monday with an agreement to extend production cuts for another nine months. West Texas Intermediate (WT) oil prices surged to $60.24/barrel after the news, but the rally was short-lived. Profit-taking and fears of slowing demand triggered a wave of selling that sent prices to $58.57/b in New York on Monday. Prices drifted higher and opened in Toronto today at $58.94/b.
Today, the Reserve Bank of Australia cut its overnight cash rate (OCR) to 1.0% from 1.25% as widely expected. AUDUSD dropped then climbed because the policy statement was a tad less dovish than traders were anticipating. The RBA was slightly more upbeat on the outlook for global growth describing it at “reasonable” while stating that domestic growth would be around trend.
USDCAD followed broad US dollar moves. Prices touched 1.3058 on Friday due to month-end portfolio rebalancing sales and then quickly rebounded ahead of the weekend G-20. Better than expected US ISM Manufacturing PMI data underpinned the greenback and undermined the Canadian dollar.
There aren’t any Canadian economic reports available today, and the US data is second tier.
Today’s Suggested Range USD/CAD: 1.3070 – 1.3170
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