Canadian Dollar Update June 25, 2019 – Canadian Dollar grinding higher
USD/CAD Open: 1.3169-1.3170 Overnight Range: 1.3152-1.3205
Oil is at $58.22 and gold is at $1,435. US markets are lower today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3201. Support is at 1.3123.
The Canadian dollar is grinding out gains, supported by lofty oil and gold prices. Gold (XAUUSD) has soared over 12% since May 30th as the world’s major central banks open the money taps. The Reserve Bank of New Zealand policy meeting is Wednesday. They cut interest rates at their last meeting and are widely expected to leave rates unchanged. However, they have an easing bias as does the Reserve Bank of Australia, the Bank of Japan, and the European Central Bank. The US Fed left rates unchanged at last week’s FOMC meeting but adopted a dovish stance and are expected to cut interest rates at the July meeting.
The Federal Open Market Committee (FOMC) deleted “patient” in the description of their outlook and replaced it with “monitoring”. Analysts decided that the change meant the Fed was getting ready to cut rates. Fed Chair, Jerome Powell, said that the statement had “significant changes” and traders are hoping they will expound on that theme in his speech today, slated for around noon hour.
The Iran/US tiff has underpinned oil prices. West Texas Intermediate (WTI) touched $58.08/b overnight before drifting down to $57.68/b in Toronto trading.
In Asia, USDJPY plunged from 107.39 to 106.79, fueled by US 10-year Treasury yields dipping below 2.0%. Prices recovered when those yields recouped their losses. However, further gains are limited by the Bank of Japan and Fed’s dovish monetary outlook.
EURUSD ticked above the 1.1400 level but could not sustain the momentum. Prices retreated to 1.1380 in Toronto as traders digest recent central bank outlooks and economic reports. Nevertheless, gains are limited by the prospect of renewed monetary policy stimulus from the ECB.
Sterling benefited from the broad US dollar weakness, but ongoing uncertainty around Brexit and the Conservative Party leadership contest capped gains. Prices are well below their overnight peak of 1.2783.
The Canadian dollar continues to be supported by broad US dollar weakness and the prospect of two or more US interest rate cuts in this year, with the first cut occurring in July. The US/Iran tensions and the risk of supply disruptions through the Strait of Hormuz, combined with the expected OPEC production cut extension until the end of the year has elevated crude price and lifted the Canadian dollar in the process.
There aren’t any Canadian economic reports available today. US Housing Starts and Consumer Sentiment are on tap.
Today’s Suggested Range USD/CAD: 1.3120 – 1.3220
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