Canadian Dollar Update, June 19, 2020 – Canadian Dollar will ignore Retail Sales
USD/CAD Open: 1.3583-87, Overnight Range: 1.3547-1.3615
WTI Oil is at $40.13 and gold is at $1,758.60. US markets are higher today.
For today, USD resistance is at 1.3614. Support is at 1.3523.
• Canada April Retail Sales fell 26.4%
• EURUSD stalled as EU debates Germany/France Relief Fund
• GBPUSD slumps as debt-to-GDP reaches 100.5%
The Canadian dollar is treading cautiously and is on the defensive as the FX week winds down. USDCAD bounced between 1.3507 and 1.3678 this week and is currently hovering just below the halfway point of that range.
The USDCAD short-term technicals are bearish while prices are trading below 1.3650 with traders looking for a decisive break below 1.3440 to extend losses to 1.3050. However, a move above 1.3650 opens the door to further gains to 1.3880.
This month’s Retail Sales report will be a non-factor for Canadian dollar traders, even if April’s result is at or exceeds forecasts. That is because the results are due to the unprecedented measures adopted by the Federal and Provincial governments, to combat the COVID-19 pandemic. Those measures were used by various G-10 governments, which means the Canadian results are similar to the results seen elsewhere.
Wall Street closed with little change, while Asia markets were a tad more upbeat. European stock markets are higher, and S&P 500 futures point to a positive open on Wall Street. Those stock market gains should translate to mildly positive FX risk sentiment, which will undermine the US dollar and lift the Canadian dollar by default.
Domestic economic data still has some impact on FX markets, as evidenced by GBPUSD’s performance today.
UK Retail Sales data for May exceeded expectations. The results were ignored by FX but not equity traders. However, news that the total UK debt surged to £1.95 trillion or 100.05% of GDP weighed on the currency pair. GBPUSD is also under pressure to fears that they will not have a trade deal with the EU when the transition period ends, December 31, 2020.
EURUSD is stalled in a tight 1.1196-1.1220 range as the EU 27-member parliament meets to discuss the France/Germany €750 billion COVID-19 Relief Fund, in addition to their €1.1 trillion budget. Approval of the Relief Fund is not guaranteed as Sweden, Denmark, Australia, and the Netherlands, have issues with many of the terms.
USDJPY is trading with a bit of a risk-averse bias. Concerns about the flare-up of tensions between North and South Korea and fears about a second wave COVID-19 outbreak are weighing on the currency pair. However, a bounce in US Treasury yields is acting as a drag on losses.
Oil prices rallied overnight. News that OPEC members are carefully complying with production cut quotas has lifted prices and provided some support to the Canadian dollar.
There isn’t any US data of note today. Wall Street price action and pre-weekend position adjustments will dictate FX market direction.
Today’s Suggested Range USD/CAD: 1.3530– 1.3630