Canadian Dollar Update November 20, 2019 – Canadian Dollar drops off a cliff
USD/CAD Open: 1.3267-1.3268, Overnight Range: 1.3262-1.3315
Oil is at $55.65 and gold is at $1,470.80. US markets are lower today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3332. Support is at 1.3244.
The Canadian dollar is rangebound no more. Prices soared through the top of the USDCAD 1.3040-1.3240 band that contained price action since October 11 yesterday and continued to climb overnight. That move is a sharp contrast to the move that occurred immediately following Tuesday’s release of the Canadian Manufacturing Shipments report. September Manufacturing Shipments were expected to drop 0.6% m/m. The drop of just 0.2% surprised traders and USDCAD dropped to 1.3190. However, the details were a tad less stellar, and the sellers became buyers, lifting USDCAD to 1.3220.
Prices accelerated around lunchtime due to dovish comments from Bank of Canada Deputy Governor Carolyn Wilkins. She addressed the Montreal International Finance Club, speaking about “Financial Uncertainty in an Uncertain World.” Her comments about how the BoC would respond to an economic downturn and financial stress triggered by bad news on the trade front, sent USDCAD soaring. If traders were not thinking about BoC rate cuts in December, they sure were after her speech.
In addition to the domestic influences undermining the Canadian dollar, the Loonie also suffered from a downturn in risk sentiment. Traders are concerned that the US/China trade talks have stalled and President Trump’s repeated threats to raise tariffs even higher if a trade deal is not reached, didn’t help sentiment.
FX risk sentiment took a hit on the news. The Japanese yen rallied, and the commodity currency bloc was sold.
The UK leaders debate between Prime Minister Boris Johnson and Labour’s Jeremy Corbyn was considered a draw. That was a bit of bad news for GBPUSD, which dropped from 1.2929 to 1.2888 as the risks for another minority government rose.
Today, Canadian dollar traders are awaiting the release of October inflation data. Analysts expect headline CPI to have risen 0.4% m/m.
The minutes of the October 30 FOMC meeting are due this afternoon.
Today’s Suggested Range USD/CAD: 1.3220 – 1.3320
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