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Canadian Dollar Update October 2, 2019 – Canadian Dollar an oasis of calm

USD/CAD Open: 1.3219-1.3220 Overnight Range: 1.3206-1.3300

Oil is at $53.50 and gold is at $1,498.30. US markets are lower today.

The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3325. Support is at 1.3217

The Canadian dollar is an oasis of calm in turbulent FX markets, especially when measured against GBPUSD. Yesterday, the Canadian dollar tested resistance and support boundaries and rejected them both. USDCAD continues to bounce inside its two-week-old range of 1.3200-1.3305. The Canadian dollar continues to derive support from narrowing US/CAD short term interest rates, relatively firm oil prices, and decent domestic economic data. At the same time, deteriorating global growth, geopolitical tensions, particularly in the Middle East, and broad US dollar demand limit Canadian dollar gains.

The US dollar recouped some of yesterday’s losses in a busy overnight session. Asia opened with AUDUSD and NZDUSD rising, continuing the flow from North America. The rally ran into headwinds. Goldman Sachs analysts triggered AUDUSD selling after issuing a report warning of quantitative easing. They said the RBA’s intermodal projects they need to buy $200 billion of bonds to meet its inflation and employment targets. AUDUSD dropped to 0.6772 from 0.6717 and is trading in Toronto close to the low. NZDUSD price action mirrored AUDUSD moves.

USDJPY traded with a negative bias alongside falling US Treasury yields. 10-year US Treasury yields plummeted from 1.75% to 1.682% yesterday and then consolidated those losses overnight. Tuesday’s, weaker than expected US ISM Manufacturing PMI data sparked recession concerns. That led to safe-haven demand for yen, broad US dollar weakness, and a losing day on Wall Street.

The British pound has been extremely volatile in the past 24 hours. The UK needs to present an acceptable plan to the European Union by October 17 or ask for an extension by October 19. Prime Minister Boris Johnson said the UK was ready for a “no-deal” Brexit and addressed the Tory conference today. GBPUSD has traded erratically in a 1.2208-1.2334 range over the past twenty-four hours.

EURUSD bounced in a 1.0904-1.0940 range overnight after rallying from 108.88 yesterday when the US ISM Manufacturing data missed forecasts. Traders are torn between buying EURUSD on rising US recessions concerns or selling EURUSD because of the dovish ECB outlook.
Broad US dollar moves will guide Canadian dollar direction, as will Wall Street price action. Today’s US data includes ADP employment. The Canadian calendar is empty.

Today’s Suggested Range USD/CAD: 1.3170 – 1.3270

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By KBFX | October 2, 2019 | Daily Update | 0 comments

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