Canadian Dollar Update March 4, 2019
USD/CAD Open: 1.3296-1.3297 Overnight Range: 1.3273-1.3325
The Canadian dollar was rangebound in overnight currency exchange markets. Oil is at $56.48 and gold is at $1,289. US markets are higher. There are no releases scheduled for today’s session.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3348. Support is at 1.3272.
The Canadian dollar is in worse shape than it was at Friday’s close. The currency got crushed on news that Q4 Canadian Gross Domestic Product was far weaker than forecast, rising just 0.4%. Economists were expecting a gain of 1.2%, y/y. Statistics Canada erred and released the report about 25 minutes ahead of schedule. Lucky traders got the news early, and USD/CAD started climbing twenty minutes ahead of the scheduled release. Prices soared, and USD/CAD gained 1.4% as of this morning’s open in Toronto.
The details of the GDP report were as weak as the headline implied and it was the slowest quarterly growth in two years. However, the Canadian dollar’s reaction to the data appears to be a tad overdone. The steep drop in oil prices led most economists to predict a weak quarter. Also, the data is more than two months old, and since them, West Texas Oil prices have recovered, rising 32% since Christmas Eve. Canadian employment data has been better than expected as well. The Canadian GDP data ensure a very benign Bank of Canada policy statement on Wednesday.
The Canadian dollar opened in Asia with a tiny gain compared to Friday’s close. That’s because Asia markets started with a “risk-friendly” tone, sparked by China/U.S. trade talk headlines. There were many reports that the two nations were close to coming to a trade agreement. China reportedly agreed to lower tariffs on a host of products which included agriculture, chemicals, and autos. In turn, the U.S. would remove all sanctions and tariffs. If so, there is speculation that President Trump and President Xi Jinping will meet near the end of this month.
The Canadian dollar was bought, alongside the other majors after President Trump complained about Fed Chair Jerome Powell. He said Powell “likes a strong dollar” and “likes raising rates.” The selling didn’t last as traders concluded his comments were just “noise.”
The U.S. dollar rallied strongly across the board on Friday supported by better than expected U.S. economic data, and U.S./E.U. trade concerns. It had a mixed overnight session to start the week. EUR/USD traded lower after euro-zone data missed forecasts. Traders are also concerned about another dovish European Central Bank meeting on Thursday.
GBP/USD drifted lower in early Toronto trading. Weaker than expected U.K. Manufacturing Construction Purchasing Managers Index combined with Brexit concerns weighed on the currency pair. USD/JPY was underpinned by the minor shift into riskier assets and by firmer U.S. Treasury yields.
The data cupboard is empty this morning. Canadian dollar direction will be governed by general U.S. dollar sentiment, which in turn will be dictated by Wall Street moves.
Today’s Suggested Range USD/CAD: 1.3250 – 1.3350
Sincerely,
Rahim Madhavji | Knightsbridge Foreign Exchange | Toll-Free: 1-877-355-5239
www.knightsbridgefx.com
Knightsbridge Foreign Exchange has based the opinions expressed herein on information generally available to the public. Knightsbridge Foreign Exchange makes no warranty concerning the accuracy of this information and specifically disclaims any liability for trading decisions based on the opinions expressed and information contained herein. Such information and opinions are for general information only and are not intended to present advice with respect to matters reviewed and commented upon.
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