Canadian Dollar Update September 27, 2019 – Canadian Dollar awaiting US data
USD/CAD Open: 1.3267-1.3268 Overnight Range: 1.3245-1.3278
Oil is at $55.63 and gold is at $1,496.30. US markets are mixed today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3280. Support is at 1.3235.
The Canadian dollar traded slightly firmer in a narrow range, overnight. The currency support came from small losses in the US dollar against the G-10 majors, which were partly due to pre-weekend profit-taking. The greenback is higher across the board compared to Monday's New York open, led by gains against the British pound. The Canadian and New Zealand dollars bucked the trend and posted small gains.
GBPUSD was the biggest mover overnight, falling from 1.2335 to 1.2272. Sellers emerged following remarks by Bank of England policymaker Michael Saunders. He warned that prolonged, high Brexit uncertainty could warrant looser monetary policy, especially if global growth continued to disappoint. His comments weren't new. However, in the environment, where the European Central Bank and the US Fed have cut interest rates, they carried more weight. Traders ignored the part where he suggested rates could go higher if Brexit uncertainty improves and global growth resumes.
Also, Brexit concerns continue to weigh on the currency. Prime Minister Boris Johnson insists that Britain will leave the EU on October 31. Anti-Brexit MP's are striving to thwart Johnson's efforts. Some EU officials describe the chances of an EU/UK deal by October 31 as "slim." EU President Jean-Claude Juncker said it is Britain’s fault if a Brexit deal isn't reached.
EURUSD started the week under selling pressure from weaker than expected data. That theme continued this morning. EURUSD dropped to 1.0906 from 1.0925 following weaker than forecast Industrial Confidence, Business Climate and Economic Sentiment indicator data. Consumer Confidence was unchanged.
Global markets are looking ahead to the next round of US/China trade negotiations which are slated to begin October 10, in Washington. China pledged to buy additional US products ahead of the meeting in response to Trump waiving tariffs (temporarily) ahead of the talks.
The US Dollar Index (DXY) appears to be losing upside momentum just above resistance in the 99.10-20 area. Prices are at levels last seen in May 2017. A break below 98.60 would suggest renewed US dollar weakness, in the short term, which could support the Canadian dollar.
USDJPY broke above its overnight high in early Toronto trading. The rally was fueled by rising US Treasury yields and in part, by pre-weekend profit-taking.
The Canadian dollar continues to be supported by lowered risks for domestic interest rate cuts as the Canadian economy continues to outperform Bank of Canada forecasts. West Texas Intermediate (WTI) oil prices add another layer of support to the currency while they remain above $50.00/barrel.
Today's US data includes Michigan Consumer Confidence and Durable Goods Orders.
Today’s Suggested Range USD/CAD: 1.3220 – 1.3320
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