Canadian Dollar Update November 14, 2019 – Canadian Dollar beset by negative risk sentiment
USD/CAD Open: 1.3250-1.3251 Overnight Range: 1.3248-1.3270
Oil is at $57.51 and gold is at $1,468.90. US markets are mixed today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3278. Support is at 1.3247.
The Canadian dollar is being undermined by a fresh wave of negative risk sentiment. The Wall Street Journal reported the US/China trade talks hit a snag. The US wants China to commit to purchases of significant dollar amounts of agricultural products. China is loath to do so as it makes a trade agreement look to be too one-sided, in favour of the US. China Commerce Ministry spokesman Gao Feng equated the importance of a “Phase 1 agreement” to the degree that tariffs get cancelled. President Trump has been mute on the subject of rolling back tariffs.
The toll the trade war was exacting on China’s economy was on full display overnight. China Retail Sales and Industrial Production data were a lot weaker than expected. Industrial Production rose only 4.7% y/y in October, compared to September’s 5.7% y/y increase. Retail Sales were 7.2% y/y against a forecast for a 7.8% y/y gain.
Traders did not expect any fresh monetary policy insight from Fed Chair Jerome Powell’s testimony to Congress yesterday. Their expectations were met. The Fed Chair reaffirmed market sentiment that rates would remain unchanged for the foreseeable future. He said, “We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2 percent objective.”
Concerns that the trade talks have stalled alongside a steady Fed policy outlook and the weak China data sparked a mild bout of risk aversion sentiment. EURUSD attempted to rally after German GDP rose a tad higher than forecast, but the gains were not sustained. Prices dropped from the overnight peak of 1.1014 to 1.0990 in early Toronto trading. Traders ignored Eurozone GDP data and comments by ECB official Luis De Guindos. He said, “A recession is a very unlikely event — that is not going to happen.” But I think the main risk is that we are going to have a long period of time with (growth) below potential.”
GBPUSD continued to consolidate recent gains in a 1.27760-1.2960 range. However, prices were weighed down by weak Retail Sales data.
The Australian dollar was the biggest loser against the US dollar overnight, among the G-10 major currencies. The Australia employment report showed a loss of 19,000 jobs rather than the 15,000 gain that was expected. AUDUSD sank to 0.6783 from 0.6839 on the news and is at the bottom of that range in early Toronto trading.
Traders will be alert for news on the US/China trade front. The day’s data is second-tier and includes US Jobless Claims, PPI and the Canada New Housing Price Index.
Today’s Suggested Range USD/CAD: 1.3200 1.3300