Overnight Range 1.3050-1.3113
The US dollar edged higher following this morning’s American data releases. GDP and Jobless claims were better than expected. The data supports Janet Yellen’s comment yesterday hinting at a rate hike. She said “we do need, if things continue on their current course, to gradually remove the accommodation that is there.”
The news that Opec had agreed to a production cut deal which was announced yesterday afternoon set the tone for FX markets overnight. It wasn’t a full-blown “risk-on” environment but riskier assets were in demand. USDJPY was the big mover overnight, rallying from 100.65 to 101.74 with the Nikkei gaining 1.39%. It is half year end in Japan (Sep. 30) which may have had an impact. AUDUSD and NZDUSD climbed in Asia but retreated in Europe. Both currency pairs are below their overnight opening levels with Kiwi impacted by the doveish central bank outlook.
The dollar selling enthusiasm evident in Asia went missing in Europe. EURUSD GBPUSD and USDJPY all declined. Eurozone Economic Sentiment data improved but had little impact on FX trading due to the overhang from Brexit.
USDCAD rebounded from yesterday’s 1.3048 low, rising steadily during the Asia session due to a mix of profit-taking and general negative sentiment surrounding the Canadian economy. In addition, the details of the Opec production cap agreement are sketchy and the reality is that the so call agreement is merely a promise to study and evaluate the idea prior to the Opec general meeting on November 30. USDCAD movements will be driven by WTI price swings.
USDCAD technical outlook.
The intraday usdcad technicals are bearish while trading below 1.3110 and supported by the break below 1.3150 which suggests another test of support at 1.3040 and then the 1.2990-1.3010 pivot area. A break below 1.2990 points to further losses to 1.2850. A move above 1.3120 should extend gains to 1.3150. For today, USDCAD support is at 1.3040 and 1.3000. Resistance is at 1.3120 and 1.3160.
Today’s Range 1.3020-1.3120