Canadian Dollar Update May 28, 2019 – Canadian Dollar Dips
USD/CAD Open: 1.3465-1.3466 Overnight Range: 1.3433-1.3479
The Canadian dollar was rangebound in overnight currency exchange markets. Oil is at $59.44 and gold is at $1,279. US markets are higher. The Conference Board Consumer Confidence Index is scheduled to be released today, in the United States, and is expected to be higher than the last update.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3488. Support is at 1.3449.
The Canadian dollar drifted lower in a quiet overnight session and then added to those losses in early Toronto markets. The domestic currency is tracking broad US dollar moves against the major G-10 currencies, and those US dollar moves have been higher, albeit not substantially so.
UK and US traders have returned to their desks after long weekend holidays but haven’t demonstrated much eagerness to get involved in trading. EURUSD traders are still digesting the results of the European Parliament elections. Right-wing parties made some gains, but the status quo is still solidly in charge. EURUSD is pressured by news of Greek elections slated for June and EU threats to fine Italy for budget infractions. EURUSD traders ignored mixed to firm Eurozone Business Climate, Economic Sentiment and Industrial confidence data. The single currency kept to a narrow 1.1176-1.1195 range.
GBPUSD banged around in a 1.2655-1.2700 range. Prime Minister Theresa May’s planned resignation, effective June 7, triggered a conservative party leadership race, which in turn raised the risk of a “no-deal” Brexit. GBPUSD is under pressure as a result.
There is a mild whiff of risk aversion in markets. An article in the South China Morning Post (SCMP) claims China blames the American’s for the collapse in the trade talks. The story, quoting “unnamed sources” says the Americans kept changing their demands. They said the US wanted China to completely open its internet while dropping the requirement for foreign cloud computing companies to store data in China. The American’s wanted a monitoring mechanism to verify progress with the risk of tariffs for non-compliance. China’s quasi-official response suggests the trade talks will be a lengthy, tedious procedure.
President Trump is winding down his Japan visit. US/Japan trade talks appear to be pushed out to August, after Japanese elections. USDJPY squeaked out small gains in early Asia trading, and those gains were erased in Europe and early Toronto trading. A drop in US 10-year Treasury yields fueled the downside slide.
Oil prices were on the move. West Texas Intermediate (WTI) recovered from yesterday’s plunge to $58.16/barrel and are trading at $59.02 this morning in Toronto. Prices are supported by continued OPEC production cuts and sanctions against Venezuela and Iran. However, fears of a protracted US/China trade war slowing global growth, have limited the upside.
Canadian dollar traders are looking for a mildly hawkish Bank of Canada policy statement on Wednesday to offset broad US dollar strength and keep the currency inside the well-defined USDCAD range of 1.3370-1.3520.
Today’s US data includes the March Case Shiller Housing Price Index and Consumer Confidence.
Today’s Suggested Range USD/CAD: 1.3400 – 1.3500
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