Canadian Dollar Update, September 23, 2020 – Canadian Dollar looking vulnerable
USD/CAD Open: 1.3317-21, Overnight Range: 1.3294-1.3374
WTI Oil is at $39.95 and gold is at $1,867.80. US markets are mixed today.
For today, USD resistance is at 1.3408. Support is at 1.3328.
The Canadian dollar is consolidating losses as the US dollar opens in New York on a mixed note. USDCAD broke above resistance at 1.3260 on Monday and has not looked back, since.
Prices are in a rising 1.3300 -1.3370 channel with traders looking for gains to 1.3550.
Canadian dollar direction is dictated by broad US dollar moves, particularly EURUSD price action. That relationship will be tested tonight and tomorrow when traders digest today’s Liberal government Throne Speech. The government prorogued parliament six weeks ago to avoid incessant scrutiny over WE charity issues, ethics violations and the resignation of Finance Minister Bill Morneau.
Global risk sentiment has improved. The US House of Representatives passed a bipartisan spending bill that avoids a government shutdown until December 11. Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin’s testimony to Congress yesterday did not offer any fresh insight into the Fed’s monetary policy outlook. The testimony continues today.
GBPUSD rebounded to 1.2747 after reaching 1.2677 overnight.
UK Manufacturing and Services PMI were at or close to forecasts, and the 2.2% rise in the FTSE 100 gain sparked profit-taking. Gains may be limited due to the resurgence of COVID-19 cases. EU Chief Trade Negotiator Michel Barnier said that the EU was determined to get a trade deal.
The Reserve Bank of New Zealand did its part to crush NZDUSD. They left interest rates and policy unchanged and reiterated that the risks to their outlook were to the downside. The damage came from the RBNZ saying they were “on track to be operationally prepared for negative interest rates by year-end.” NZDUSD dropped to 0.6590 from 0.6646.
AUDUSD suffered following a prediction by Westpac Bank that the RBA would cut interest rates to 0.1% from 0.25% on October 6. AUDUSD dropped from 0.7176 to 0.7113.
There is not any Canadian data on tap today, and the US data is second-tier.
Today’s Suggested Range USD/CAD: 1.3270 – 1.3370