Canadian Dollar Update November 1, 2019 – Canadian Dollar awaits NFP data
USD/CAD Open: 1.3163-1.3164 Overnight Range: 1.3141-1.3196
Oil is at $55.05 and gold is at $1,512.30. US markets are higher today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3238. Support is at 1.3131.
The Canadian dollar is trading in Toronto right where it closed on Thursday, after trading without conviction overnight. The Canadian dollar drifted higher alongside its antipodean counterparts when Caixin China Manufacturing PMI data came out at 51.7, compared to 51.5 in September. It was the highest level in two years. However, the gains were not sustained, and prices retreated during the European session.
AUDUSD received extra-support from domestic PPI reports, but not enough to offset pre-nonfarm payrolls demand for US dollars that was seen in Europe. AUDUSD rallied from 0.6888 to 0.6910 before dropping to 0.6894 in early Toronto trading. NZDUSD tracked the rest of the commodity bloc currency moves and is trading in Toronto with a small gain compared to Thursday’s closing level.
USDJPY traders were quiet. Prices drifted inside a 107.90-108.05 range as the fall-out from Wednesday’s steep drop in US 10-year Treasury yields continued to weigh on the currency pair. 10-year yields were 1.843% on Monday, and they are trading at 1.693% this morning.
There is a whiff of risk aversion sentiment in the air. The US/China trade talks seem to have hit a stumbling block over the dollar size of US agricultural products that China is expected to buy, alongside the degree of structural reforms demanded by the Americans. Chile’s cancellation of the APEC summit means that President Trump and China President Xi Jinping need to find another venue to meet if they are to sign the Phase 1 deal in November.
Fed Chair Jerome Powell indicated that the Fed was on hold, suggesting that Wednesday’s 0.25% rate cut was the last of the “mid-cycle adjustments.” However, that doesn’t mean the next rate move will be an increase. Mr. Powell said that rates would rise when inflation rises, but he didn’t see that happening. Today’s nonfarm payrolls report won’t provide any data to change that view.
EURUSD continues to be supported by Wednesday’s FOMC meeting. The decisive break above resistance in the 1.1110 area still needs to take out resistance at 1.1210 to suggest an extended rally. GBPUSD is directionless during the UK election.
There are two Fed speakers on tap today as well as the ISM Manufacturing PMI report.
Today’s Suggested Range USD/CAD: 1.3110 – 1.3210