Canadian Dollar Update November 12, 2019 – Canadian Dollar swamped by Greenback demand
USD/CAD Open: 1.3232-1.3233 Overnight Range: 1.3216-1.3257
Oil is at $57.24 and gold is at $1,454.70. US markets are higher today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3269. Support is at 1.3186.
The Canadian dollar drifted lower yesterday and then consolidated the losses overnight. The Loonie tracked the underperformance of the Antipodean currencies during the Asia session. NZDUSD got things going when it fell from 0.6406 to 0.6367 after a report showed that Q4 Inflation Expectations were 1.8%, q/q. The data was weak enough to convince traders that the Reserve Bank of New Zealand (RBNZ) will not only cut the Overnight Cash Rate (OCR) from 1.00% to 0.75% at Tuesday’s meeting but issue a dovish policy statement leaving the door open to further cuts.
AUDUSD suffered as well, despite the Business Confidence data being close to forecasts. Traders are concerned that slow wage growth and a weakening labour market will lead to additional monetary policy easing. AUDUSD dropped to 0.6834 from 0.6857.
The lack of fresh insight into the state of the US/China trade talks is also weighing on the Antipodean currencies and the Canadian dollar. Last week’s euphoria about tariffs being rolled back vanished with President Trump’s comments. He said he had not agreed to any rollbacks which led to risk-seeking trades unwinding. AUDUSD and NZDUSD retreated while USDCAD rallied.
Traders are looking ahead to President Trump’s speech to the Economics Club of New York, scheduled for lunch-time today. The greenback has been in demand on speculation that the President will announce a delay in the levying of tariffs on European auto imports. They are also hoping for some insight into the China trade talks and news if and when a Phase 1 deal will be signed. Those sentiments led to broad-based (but shallow) US dollar demand, which undermined the Canadian dollar in the process.
The British pound has enjoyed a lively 24 hours of trading. Yesterday, GBPUSD spiked to 1.2897 from 1.2806 when Brexit Party Leader Nigel Farage announced his party wouldn’t run any candidates in 317 ridings held by Conservatives. However, prices started to recede almost immediately and continued to drift lower from yesterday’s closing level of 1.2855 to 1.2817 just before Toronto opened. Disappointing UK employment data exacerbated the move.
EURUSD ignored improved German investor sentiment. The ZEW Confidence Survey rebounded to -2.1 from -22.8 previously, but it wasn’t enough to lift the single currency. EURUSD dropped to 1.1012 from 1.1037 on the back of broad US dollar sentiment.
The Canadian dollar is under pressure and ignored the rebound in West Texas Intermediate oil prices to around the $57.00 area. Trade deal hopes lifted oil prices while the Loonie suffers from broad-based bullish US dollar sentiment.
The Canadian and US economic calendars do not have any top tier data.
Today’s Suggested Range USD/CAD: 1.3180 – 1.3280
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