Canadian Dollar Update, September 3, 2020 – Canadian Dollar drops
USD/CAD Open: 1.3094-98, Overnight Range: 1.3036-1.3162
WTI Oil is at $41.38 and gold is at $1,935.00. US markets are lower today.
For today, USD resistance is at 1.3154. Support is at 1.3108.
• US dollar higher ahead of employment data today and Friday
• Oil price drop, undermines Canadian dollar
• US dollar extends Wednesday’s gains, opens higher across the G-10 spectrum
The Canadian dollar rallied when the US dollar was under pressure which explains why it is sinking when the US dollar gains. It isn’t alone. The G-10 major currencies are suffering alongside the Canadian dollar as the greenback starts to recoup some of its summer losses.
The Canadian dollar is getting additional negative pressure from the steep drop in crude prices this week.
West Texas Intermediate, the North American benchmark dropped from $43.54/barrel on Monday to $40.64/barrel today, a loss of 6.7%. The drop occurred despite a 9.3 million barrel reduction in US crude inventories. Hurricane Laura skewed the results, and they were ignored.
However, oil prices are having less and less impact on Canadian dollar pricing due to the decimation of the Alberta energy industry, in part because of the Federal government’s, anti-oil policies.
The Canadian dollar is tracking EURUSD moves closely, and the single currency has been under pressure since peaking at 1.2010 on Tuesday. The technicals are bearish below 1.1840 and looking for a move below 1.1750 to lead to 1.1570. EURUSD saw a bit of support from an uptick in the August Services PMI index to 50.5. Those results were offset by the weaker than expected Eurozone Retail Sales report. July Retail Sales fell 1.3% m/m compared to the forecast for a 1.5% gain.
EURUSD traders are also concerned about the September 10 European Central Bank policy meeting. Some analysts expect the ECB to adopt the Fed’s “average inflation targeting” policy while issuing a dovish statement.
GBPUSD tracked EURUSD lower falling from 1.3358 to 1.3246. Weaker than expected UK Services PMI data (actual 58.8 vs previous 60.1) contributed to the selling pressure.
USDJPY continues to consolidate in a 105.00-107.00 range. USDJPY is trading at the top of its overnight 106.15 106.49 range, with prices supported by broad US dollar strength, and expectations for a robust US economic rebound.
AUDUSD has been sliding since peaking at 0.7410 on Tuesday. Broad US dollar demand and a narrower than expected Australia trade surplus weighed on prices overnight. NZDUSD followed AUDUSD lower.
Canadian dollar direction continues to be dictated by broad US dollar sentiment. Canada employment data is due tomorrow, but the results will not have much impact on USDCAD trading.
They will be overshadowed by the US Nonfarm payrolls number and its implication on the American economic recovery.
Canada’s trade deficit is forecast to shrink from $3.2 billion to $2.5 billion. Today’s US data includes Jobless Claims, Trade and ISM Services PMI.
Today’s Suggested Range USD/CAD: 1.3050 – 1.3150