Canadian Dollar Update October 1, 2019 – Canadian Dollar dips with Antipodeans
USD/CAD Open: 1.3240-1.3241 Overnight Range: 1.3222-1.3290
Oil is at $53.38 and gold is at $1,490.70. US markets are lower today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3274. Support is at 1.3198
The Canadian dollar came under pressure alongside its antipodean cousins, overnight. USDCAD closed in Toronto on Monday at 1.3240 and opened today at 1.3273, after being caught up in AUDUSD moves.
The Reserve Bank of Australia (RBA) acted as expected and cut the Overnight Cash Rate (OCR) to 0.75%, which knocked the Australian dollar for a loop. AUDUSD plunged to 0.6696 from 0.6775, taking the New Zealand and Canadian dollars along for the ride. The rate cut was the central bank's third reduction since May and, according to the statement, necessitated because the risks to the global economy were "tilted to the downside." The statement also set the table for additional rate cuts in the future.
The World Trade Organization echoed the RBA's concerns about downside risks to the global economy. They issued a press release today that said: "Escalating trade tensions and a slowing global economy have led WTO economists to sharply downgrade their forecasts for trade growth in 2019 and 2020. World merchandise trade volumes are now expected to rise by only 1.2% in 2019, substantially slower than the 2.6% growth forecast in April."
The Bank of Canada may find it increasingly difficult to continue to ignore global interest rate developments and leave domestic interest rates unchanged. Traders will be looking closely at this morning’s Canada July GDP data. Economists expect Canada July GDP to rise 0.1% compared with the 0.2% increase in June.
In Asia, weak Japanese Tankan data and concerns that the Bank of Japan would refrain from buying long term bonds boosted USDJPY. The jump in US 10-year US Treasury yields helped lift USDJPY from 108.05 to 108.46. However, the rally stalled in early Toronto trading and prices dipped to 108.27.
GBPUSD continues to ride the Brexit roller-coaster. GBPUSD dropped from 1.2305 to 1.2261, then rallied to 1.2312 before falling again and hitting 1.2285. Prices declined following a supposedly leaked report that the UK government planned a series of Irish custom checkpoints in a five to ten-mile area near the Irish border. Irish officials rejected the idea which raised the odds of a "no-deal" Brexit. Prime Minister Boris Johnson dismissed the rumour.
EURUSD clawed back Asia losses in Europe. The single currency garnered a bit of support from slightly better than expected Eurozone Manufacturing PMI data and unchanged Core CPI. EURUSD bounced to 1.0907 from 1.0880.
Wall Street closed with gains yesterday, and US equity futures point to a positive opening today, which should provide fresh support to the US dollar. Today's US data includes ISM manufacturing PMI and Construction spending.
Today’s Suggested Range USD/CAD: 1.3190 – 1.3290
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