Canadian Dollar Update June 12, 2019 – Canadian softer as crude prices sink
USD/CAD Open: 1.3286-1.3287 Overnight Range: 1.3278-1.3305
The Canadian dollar was rangebound in overnight currency exchange markets. Oil is at $52.05 and gold is at $1,336.30. US markets are mixed today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3308. Support is at 1.3269.
The Canadian dollar retreated from yesterday’s peak, in part, because of a 4.8% drop in West Texas Intermediate (WTI) oil prices since yesterday. WTI topped out at $54.02/barrel on Tuesday and fell steadily until finding some support at $51.50 in Asia. Prices came under pressure on rising risks that the reported plans for OPEC and Russia to extend production cuts until year-end wouldn’t be enough to stem the demand slowdown from slowing global growth. The American Petroleum Institute’s report that weekly crude stocks climbed 4.85 million barrels spurred a further drop in Asia, overnight. Canadian dollar sellers tracked oil price movements.
Asia FX markets ignored Chinese economic reports. China inflation and PPI data were mostly as expected. Instead, rising political tensions in Hong Kong and China’s reaction to the demonstrations sparked a bit of risk aversion sentiment, leading to Asian equity indices selling.
AUDUSD and NZDUSD traded with a negative bias because of the equity market weakness and softer commodity prices. Both those currencies are being weighed down by dovish central bank policies and a dip in commodity prices.
The Japanese yen is in the process of returning some of its overnight gains in early Toronto trading. The yen gained on the back of falling US Treasury yields during the Asia session, but US dollar weakness against EUR and GBP led to a modest retreat. British pound traders have had a busy day. GBPUSD closed at 1.2723. yesterday, climbed to 1.2756 in early Toronto trading and then retreated to 1.2730 shortly afterwards. The rally was triggered after Boris Johnson, the front-running candidate to replace former Prime Minister, Theresa May, said he wasn’t aiming for a “no-deal” Brexit but leaving that option on the table was a negotiating tool.
EURUSD gave back European gains in Toronto trading. ECB officials have warned of the necessity of new monetary policy easing if inflation remains low and the economic slowdown worsens.
The Canadian dollar ignored broad US dollar moves and continued to consolidate Friday’s post-employment report gains. Traders are awaiting this morning US inflation and PPI data, although its impact may be limited. US CPI is forecast to rise 1.9% year over year, while Core CPI will rise 2.1%.
FX markets are biding their time until the G-20 summit in Osaka, Japan on June 28 and 29. US NEC Director, Larry Kudlow, said that China/US trade talks would resume after President Trump and President Xi Jinping meet at the G-20.
Today’s Suggested Range USD/CAD: 1.3230 – 1.3330
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