Canadian Dollar Update July 31, 2019 – Canadian Dollar is the winner
USD/CAD Open: 1.3119-1.3120 Overnight Range: 1.3119-1.3158
Oil is at $58.58 and gold is at $1,444. US markets are higher today.
The short-term USD/CAD technicals are neutral-bullish. For today, USD resistance is at 1.3186. Support is at 1.3079.
The Canadian dollar wins the blue ribbon for the best performing major G-10 currency in July. It only lost 0.42% against the US dollar, from where it finished in Toronto on June 28 and where it opened today. That is a far better performance than the British pound. The election of Boris Johnson as UK Prime Minister and the ensuing elevated risk of a “no-deal” Brexit fueled a 4.2% drop in GBPUSD. Dovish central bank policies were behind the drop in the Euro, and Australian and New Zealand dollars.
The US dollar opened in Toronto on a mixed note. Traders were reluctant to get involved ahead of this afternoon’s Federal Open Market Committee (FOMC) meeting. However, month-end portfolio rebalancing demand and important economic data releases pulled them off the sidelines.
The China/US trade talks ended without any headlines proclaiming progress, let alone a break-through. China released mixed to better PMI data. Manufacturing PMI for July was slightly better than forecast while Non-Manufacturing PMI was a tad worse than expected.
In Australia, higher than expected Q2 CPI (Actual 1.6% y/y vs forecast 1.5%) and month-end demand boosted AUDUSD, which rose from 0.6589 to 0.6617. The data suggested that the Reserve Bank of Australia could be less hasty in easing monetary policy further. The New Zealand dollar wasn’t as fortunate. NZDUSD dropped following a disappointing Consumer Confidence Survey.
The Japanese yen meandered inside a narrow band. Traders are torn between the Bank of Japan’s dovish economic outlook and fears of a less dovish than expected FOMC result today. US Treasury yields were steady and didn’t provide any direction.
EURUSD traders were busy thanks to a slew of economic data releases. German June Retail Sales rose 3.5% (forecast 0.5%), and employment was as expected. Eurozone GDP at 1.1% y/y was better than forecast but below the previous result of 1.2% y/y. Inflation results were mixed. Headline CPI rose 1.1%, as expected but Core CPI rose only 0.9% y/y. (Forecast 1.0% y/y). Analysts suggested that today’s results will support the European Central Bank’s easing bias.
Canadian dollar traders are eagerly awaiting May GDP data which is forecast to rise 0.1% compared to a 0.3% rise in April. The dip is explained by a combination of lower Retail and Wholesale volumes and sluggish home sales. Industrial Product Price and Raw Material Price data are also on tap.
Today’s US data includes the Chicago PMI survey and ADP employment. It should not have much impact on FX trading ahead of the afternoon’s FOMC decision.
Today’s Suggested Range USD/CAD: 1.3080 – 1.3180
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