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Canadian Dollar Update November 25, 2019 – Canadian Dollar recoups some losses

USD/CAD Open: 1.3295-1.3296, Overnight Range: 1.3285-1.3315

Oil is at $57.62 and gold is at $1,457.10. US markets are higher today.

The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3329. Support is at 1.3280.

The Canadian dollar closed Friday’s session with a small loss compared to its opening level. It was not alone. The rest of the G-10 major currency pairs suffered a similar fate, led by slides in EURUSD and GBPUSD. Retail Sales data exacerbated the Canadian dollar weakness. The results met expectations but were a tad soft.

The Canadian dollar was also on the defensive because of somewhat contradicting speeches by Bank of Canada Governor Stephen Poloz and Deputy Governor Carolyn Wilkins. On Tuesday, Ms. Wilkins delivered a dovish statement. She spoke of downside economic risks and said that with the overnight rate at 1.75%; the BoC had plenty of room to cut interest rates. Two day’s later, Mr. Poloz suggested that the BoC wasn’t in any hurry to change its policy stance. He said, “We think we’ve got monetary conditions about right given the situation.”

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FX markets opened in Asia on an upbeat tone today. That was in response to President Trump’s comments on Friday when he said the US and China were close to a trade deal. There were also reports that the two sides were very close to inking a Phase 1 deal and were committed to Phase 2 and Phase 3 discussions. However, the enthusiasm soured when US National Security Advisor Robert O’Brien said that how events unfold in Hong Long would be an issue.

China may be motivated to resolve the trade dispute. Morgan Stanley analysts predict China’s 2020 GDP would plunge to 5.3% if trade war tensions escalate. On the other hand, a trade deal would suggest better than 6% GDP growth.

GBPUSD rallied in Europe following weekend YouGov polls predicting a majority government for Boris Johnson’s Conservative Party. GBPUSD climbed to 1.2883 from 1.2842 and opened in Toronto with a bullish bias.

FX activity will be lighter than usual this week because of the US Thanksgiving holiday on Thursday. It is the biggest American holiday of the year, and many market participants will get as early a start to the festivities as they can. There isn’t a whole lot of actionable data on tap either. Canada Q3 GDP growth is due Friday. A significant deviation from the 0.2% m/m September gain could spark a sharp move in the Canadian dollar, because of the holiday-thinned markets.

Canada Wholesale Trade and Chicago Fed National Activity Index are due today.

Today’s Suggested Range USD/CAD: 1.3250 – 1.3350

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By KBFX | November 25, 2019 | Daily Update | 0 comments