Canadian Dollar Update June 17, 2019 – Canadian Dollar flirting with resistance
USD/CAD Open: 1.3407-1.3408 Overnight Range: 1.3400-1.3419
The Canadian dollar was rangebound in overnight currency exchange markets. Oil is at $52.18 and gold is at $1,345. US markets are higher today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3425. Support is at 1.3390.
The Canadian dollar sank like a rock on Friday, and it is still submerged today. FX markets started the week on a flat note due to a rash of risks looming in the coming days. Not only that, traders were a tad nervous around the inflammatory rhetoric between the US, Iran, with the UK putting in its two-cents.
The UK said they believed the American government’s claims that Iran was behind last week’s attacks on two oil tankers. Iran’s denials fell on deaf ears. The Middle East was only one area of concern. Hong Kong’s protests continued on the weekend. People are upset about plans for new legislation to make it easier for China to extradite Hong Kong citizens. Fears of a heavy-handed response by mainline China curtailed trading enthusiasm.
AUDUSD traded with a bearish bias. Traders are awaiting the minutes from the June 4 Reserve Bank of Australia meeting. They hope to garner more insight into the central bank’s intentions following the cut in interest rates to a record low of 1.25%. NZDUSD was the only G10 major currency to post a gain, in part due to AUDNZD selling.
USDJPY consolidated Friday’s gains and opened near session highs. Prices are supported by higher US Treasury yields and Friday’s USD retail sales data which suggested the Fed would leave interest rates unchanged this week.
The Federal Open Market Committee policy meeting is Wednesday. They are expected to leave rates where they are but signal a rate cut in July.
UK political drama continues to weigh on GBPUSD. Boris Johnson, who is on record for saying the UK should not be afraid of leaving the EU without a deal is the leading candidate to replace Theresa May. GBPUSD traded a 1.2573-1.2597 band.
West Texas Intermediate (WTI) oil prices are bouncing in a $51.50/barrel-$54.00/b range and are trading at $52.00/b. Prices are supported by concerns of supply disruptions if the Iran/US feud escalates as well as expectations for an extension to the OPEC/Russia production cuts. Fears that rising US production and slowing global growth will create another supply/demand imbalance, cap gains.
The Canadian dollar is a bystander in the global arena. That may change later in the week when Canadian inflation and Retail Sales reports are released. Headline CPI is expected to rise 2.2% in May, compared to 2.0% in April. Retail Sales are forecast at 0.9%, m/m in April.
FX trading is likely to be a tad subdued today because of a lack of actionable economic data and the usual caution ahead of the FOMC meeting.
Today’s Suggested Range USD/CAD: 1.3360 – 1.3460