Canadian Dollar Update June 18, 2019 – Canadian Dollar trading sideways
USD/CAD Open: 1.3394-1.3395 Overnight Range: 1.3389-1.3433
The Canadian dollar was rangebound in overnight currency exchange markets. Oil is at $53.33 and gold is at $1,344. US markets are higher today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3447. Support is at 1.3349.
The Canadian dollar traded sideways overnight. There was no shortage of data or central bank-speak, but none of it was directly aimed at the currency. Canadian dollar traders are keeping their eyes on the oil market. OPEC and Non-OPEC countries are slated to meet July 12. OPEC members want to extend production cuts through to the end of the year, but Russia is not that keen. The US wants production to return to normal, especially since the risk of supply disruptions increased after the attacks in the Gulf of Oman. Traders are also very concerned about the impact of a prolonged China/US trade dispute on global growth and global oil demand.
The China/US trade dispute was one of the factors contributing to the Reserve Bank of Australia’s June 4 rate cut. The minutes from that meeting were released overnight. The RBA said that it was “more likely than not” that additional rate cuts would be needed to spur inflation and wage growth. Commonwealth Bank of Australia economists predicted two more rate cuts in 2019, which if they occur would take the OCR rate to 0.75%. The dovish bias was widely expected, but AUDUSD declined, nevertheless. The downward pressure on AUDUSD contributed to the bearish Canadian dollar sentiment.
Bank of Japan Governor, Haruhiko Kuroda, did his part to drive USDJPY down. He said that the Bank of Japan needed to be “patient” in keeping the current monetary policy easing policy since inflation was well below its price target. Selling of CADJPY undermined the Canadian dollar.
The US dollar opened in Toronto with gains across the board except against the Japanese yen. Once again, European data and UK politics bolstered demand for greenbacks, and the Canadian dollar was collateral damage.
The German ZEW data did not impress traders, and neither did a downgrade of 2020 German growth by the IFO institute. The June ZEW Current Situation index rose to 7.8 from 6.0, but those results were overshadowed by the Economic Situation Index falling to -21.1 from -2.1 in May. Making things worse, the Eurozone ZEW Economic Sentiment Index fell to -20.2 from -1.6 in May. Lower than forecast Eurozone inflation data was the icing on the cake with May Core CPI at -0.1% rather than 0.0% forecast. That news drove EURUSD down from 1.1241 to 1.1182, but sellers got added incentive from European Central Bank President, Mario Draghi. He reminded markets that persistently low inflation would lead to further monetary policy easing.
The Canadian dollar bounced inside a narrow USDCAD range of 1.3403-30. Traders are looking for guidance from today’s Manufacturing shipments data and tomorrows inflation report.
Today’s Suggested Range USD/CAD: 1.3350 – 1.3450