Canadian Dollar Update September 10, 2019 – Canadian Dollar supported by oil
USD/CAD Open: 1.3168-1.3169 Overnight Range: 1.3143-1.3191
Oil is at $58.57 and gold is at $1,503.40. US markets are lower today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3196. Support is at 1.3109.
The Canadian dollar is in demand. A steep rally in West Texas Intermediate (WTI) oil prices since the end of August has contributed to the positive bias in the domestic currency.
Yesterday, Saudi Arabia’s new oil minister suggested that OPEC and Russia oil production caps would continue. That news, combined with a more positive tone to US/China trade talks, improved the global growth outlook, and led to the buying of “riskier assets.”
The Canadian dollar continues to benefit from Friday’s US and Canadian employment reports. US nonfarm payrolls were lower than predicted, which triggered US dollar selling on the assumption that encouraged a more aggressive Fed easing policy. The Canadian employment report beat expectations which some analysts believe makes it harder for the Bank of Canada to justify a rate cut in October.
FX market sentiment turned positive after the US and China said that face-to-face-trade negotiations would occur in October. Recent Chinese economic reports suggest the US tariffs are taking a toll on the economy. Yesterday, China reported that its trade surplus narrowed sharply and that exports fell 1.0% in August. Overnight, the Chinese data was mixed. Inflation was a tad higher but blamed on special factors while Producer Prices fell, but a tad less than expected.
The latest batch of Chinese data caused AUDUSD and NZDUSD rallies to stall. Both currency pairs drifted lower but remained well above Friday’s low. Australia Business confidence data for August was lower than what was reported in July, which weighed on the currency pair.
USDJPY has gained 1.7% since the start of the month. Prices rose of yesterday’s closing level of 107.23 to 107.49 as currency traders tracked US Treasury yields.
In Europe, EURUSD was confined to a 1.1033-58 range although sentiment is cautiously bearish. Traders are awaiting Thursday’s European Central Bank (ECB) meeting.
There are not any top tier US or Canadian data releases today, leaving FX direction to be determined by Treasury yield movements and equities.
Today’s Suggested Range USD/CAD: 1.3120 – 1.3220
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