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USD/CAD Open: 1.3388-1.3389 Overnight Range: 1.3382-1.3440
The Canadian dollar was rangebound in overnight currency exchange markets. Oil is at $51.75 and gold is at $1,339. US markets are mixed today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3426. Support is at 1.3360.
The Canadian dollar is consolidating yesterday’s gains in a USDCAD range of 1.3370-1.3420. The recent Canadian dollar gains are a direct result of widespread US dollar selling pressures that emerged after Fed Chair, Jerome Powell, signaled that US interest rates could be cut. Earlier this week, another Fed official, St Louis Fed President, James Bullard, said that a “rate cut may be warranted soon”. Both men admitted that such a move may be necessary to boost inflation and offset economic risks from trade tensions.
This morning, the European Central Bank (ECB) will issue its monetary policy statement and provide updated economic projections. Markets are expecting a dovish result due to weak Eurozone data, soft inflation and on-going Italian budget concerns.
GBPUSD ticked up from its overnight low of 1.2671 and is flirting with the 1.2700 area. Prices got a bump after Bank of England Governor, Mark Carney, said UK rates would have to rise if the economy continues to perform as the Monetary Policy Committee expects. However, the on-going leadership race to replace outgoing Prime Minister, Theresa May, and the rising risk of a “no-deal” Brexit will cap gains.
West Texas Intermediate (WTI) oil prices have bounced after touching $51.30/barrel overnight. Prices are under pressure due to concerns that the on-going US/China trade war will lead to slowing global growth and thus, less demand for crude. OPEC is trying to counter the price drop and is talking about extending existing production caps until the end of 2019.
President Trump’s threat to levy 5% tariffs on the import of all goods from Mexico has made markets nervous with traders eyeing safe-haven currencies. USDJPY touched 107.82 yesterday and has since recovered but traders appear unwilling to take prices above 108.40.
President Trump fanned the Mexico tariff fears further last night tweeting “Immigration discussions at the White House with representatives of Mexico have ended for the day. Progress is being made, but not nearly enough! Border arrests for May are at 133,000 because of Mexico & the Democrats in Congress refusing to budge on immigration reform. Further… ….talks with Mexico will resume tomorrow with the understanding that, if no agreement is reached, Tariffs at the 5% level will begin on Monday, with monthly increases as per schedule. The higher the Tariffs go, the higher the number of companies that will move back to the USA!”
In Asia, AUDUSD came under early pressure after its April trade surplus narrowed. The move didn’t last, and prices recovered in Europe. NZDUSD trade sideways, supported by yesterday’s comments from RBNZ Assistant Governor, Hawkesby, that domestic rates were likely to remain unchanged.
The Canadian trade deficit is expected to narrow modestly due to higher oil prices in April. However, the result should not have any impact on the Canadian dollar.
Today’s Suggested Range USD/CAD: 1.3340 – 1.3440
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The post Canadian Dollar Update June 6, 2019 – Canadian Dollar remains rangebound appeared first on KnightsbridgeFX.
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