USD/CAD Open: 1.3156-60, Overnight Range: 1.3134-1.3191
WTI Oil is at $38.05 and gold is at $1,959.80. US markets are higher today.
For today, USD resistance is at 1.3200. Support is at 1.3146.
• OPEC and IEA trim 2020 oil demand forecasts, again
• Better than expected China data underpins stock prices
• US dollar opens lower on mildly positive risk sentiment
The Canadian dollar inched higher overnight, following in the footsteps of gains in the commodity currency bloc and rising stock markets.
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China data got the ball rolling. Retail Sales rebounded 0.5% y/y in August, beating the forecast of 0%., and Industrial Production rose 5.6% y/y compared to 4.8% previously. The news is more evidence that China’s economic recovery is being stoked by domestic demand. Chinese stock markets rallied on the story as did Australia’s ASX index. Japan’s Nikkei closed with small losses.
The Australian dollar surged after the minutes of the Reserve Bank of Australia (RBA) meeting of September 1. The RBA noted that the “downturn had not been as severe as earlier expected, and recovery was underway in most of Australia.” They also said that “they considered it likely that fiscal and monetary support would be required for some time given the outlook for the economy and the labour market.” AUDUSD rallied on the conclusion of a stronger than expected economy and low rates for longer. NZDUSD climbed as well, getting a boost from the better than expected Chinese data.
The British pound was lively. GBPUSD dropped in early trading in Asia, then climbed steadily and opened at the session peak in Toronto. The UK government’s Internal Markets Bill passed its first reading which led to GBPUSD dropping from 1.2855 to 1.2816. The bill increases the odds for a “no-deal Brexit.” However, broad US dollar weakness on modestly improved risk sentiment squeezed short GBPUSD positions, and fueled gains to 1.2925 in Toronto. GBPUSD also got a lift from better than expected employment data, even though government job support initiatives skew the results.
EURUSD attempted to break above resistance at 1.1900 but failed. Eurozone and German ZEW Survey results were better than forecast, which supported EURUSD. German Economic Sentiment was 77.4 (forecast 69.8), while Eurozone Economic sentiment was 73.9 compared to the forecast of 62.8. Rising global stock markets and expectations for a benign FOMC meeting tomorrow fueled EURUSD demand.
Oil prices are consolidating near their recent lows after OPEC, and the International Energy Agency trimmed 2020 oil demand forecasts again. They said ongoing COVID-19 concerns would lower demand. Canadian dollar traders ignored the news, but slumping oil prices are acting as a drag on gains.
Today’s US data includes Industrial Production, Capacity Utilization, and NY Empire State Manufacturing. Canada releases Manufacturing shipments data.
Today’s Suggested Range USD/CAD: 1.3110 – 1.3210
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