USD/CAD Open: 1.3147-52, Overnight Range: 1.3086-1.3198
WTI Oil is at $36.41 and gold is at $1,933.40. US markets are lower today.
For today, USD resistance is at 1.3240. Support is at 1.3143.
• UK sucker-punches EU withdrawal agreement
• Euro area GDP ignored ahead of ECB meeting
• GBP plunge sparks broad US dollar demand vs G-10 majors
The Canadian dollar is under pressure.
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UK Brexit drama exploded on the weekend. UK and EU politicians are having a war of words over Brexit. GBPUSD is ground zero. The currency plunged from 1.3282 at the open in Asia on Monday and hit 1.3140 before closing at 1.3170 in NY. Chief Trade Negotiator David Frost told the EU that Britain was prepared to walk away without a deal. UK Guardian reported that Boris Johnson was preparing legislation to override the Brexit agreement on Northern Ireland. The EU accused the UK of backtracking on the withdrawal deal. The currency pair plunged from a closing level of 1.3280 on Friday, to 1.3023, in Toronto today.
The GBPUSD drop spooked FX traders, and they bought US dollars against the rest of the majors. USDJPY rallied the least. Prices are contained inside the 105.00-107.00 range that has been in play since the middle of August. Prices are supported by the widespread US demand, although a whiff of risk aversion sentiment is slowing gains.
EURUSD traded lower, albeit reluctantly. The single currency dropped from 1.1838 at the end of the day on Friday to 1.1779 today. Euro area Q2 GDP fell 11.8% q/q. The result was a tad better than forecast, but the result still underscores the damage that coronavirus-fighting measures did to the economy. The focus is on the ECB meeting on Thursday. A dovish result is expected because of a combination of weak HICP inflation (0.2% ) and the Fed’s new average inflation targeting policy.
Oil and gold prices are lower, in part because of the resurgent US dollar. Oil prices are also suffering from reports that China’s oil purchases will slow in the months ahead due to aggressive buying earlier.
The antipodean currencies traded lower. AUDUSD attempted to rally on Monday after better than expected China trade data, but could not sustain the move. Prices dropped from 0.7306 to 0.7241 today. NZDUSD lagged both AUDUSD gains and losses but is still down for the session.
There are not any Canadian or US economic reports on tap today. Traders will take direction form GBPUSD moves and as usual, Wall Street price action. It could be ugly as NASDAQ futures are down 230 points as of 7:30 am ET.
Today’s Suggested Range USD/CAD: 1.3100 – 1.3200
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