Canadian Dollar Update July 22, 2019 – Canadian Dollar Sidelined
USD/CAD Open: 1.3090-1.3091 Overnight Range: 1.3040-1.3096
Oil is at $56.14 and gold is at $1,428. US markets are higher today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3113. Support is at 1.3056.
The Canadian dollar started the week quietly, content to hug the sidelines along with most of the G-10 major currencies. There was plenty of geopolitical worries along with the seemingly never-ending Brexit story and concerns around the upcoming European Central Bank meeting on Thursday.
UK/Iran tensions were at the forefront. Iranian Revolutionary Guards seized a UK oil tanker in the Strait of Hormuz in retaliation for the UK’s seizure of an Iranian vessel a few weeks ago. British MP’s are still discussing their options. West Texas Intermediate oil prices soared to $56.86/barrel from Friday’s closing price of $55.73/b. The upside move ran into resistance due to ongoing concerns that the US/China trade war will reduce global crude demand. Goldman Sachs analysts lowered their forecast for global demand to 1.27 billion barrels per day from 1.45 b/pd.
The Canadian dollar was underpinned by the oil price surge, and USDCAD fell to 1.3043 from 1.3067. The Canadian dollar is stuck in a USDCAD 1.3000-1.3100 trading band. Friday’s weaker than expected May Retail Sales report led to USDCAD testing 1.3090, but it failed to extend gains higher, and prices quickly retreated. The price swing was due to analysis suggesting the Retail Sales report wasn’t as negative as the headline numbers implied and because the April result was revised higher.
The US and China may be moving closer to another round of face-to-face trade talks. China is discussing ways to increase its imports of US soybeans.
The British pound was the biggest loser as of today's Toronto open. GBPUSD dropped from 1.2503 to 1.2458 due to the near-certainty that Boris Johnson will become Prime Minister. Mr. Johnson is on record for being willing to leave the European Union without a deal, which is undermining the currency pair. There are also concerns that the new Prime Minister could call a snap election.
EURUSD traded in a narrow band with a bearish bias. The European Central Bank monetary policy meeting is Thursday, and it brings the risk of new monetary stimulus. ECB President Mario Draghi has warned repeatedly that the lack of growth and low inflation will lead to rate cuts. Many analysts believe that if such an action were to occur, it wouldn’t be until the September 12 meeting. However, another school of thought suggests that Mr. Draghi could cut rates on Thursday, thus getting a bigger market “bang for his buck”.
Canada Wholesale Sales data is on tap today. There isn’t anything from the US.
Today’s Suggested Range USD/CAD: 1.3040 – 1.3140
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By KBFX | July 22, 2019 | Daily Update | 0 comments