Loonieviews 31Aug16


August ending with a whimper

USDCAD Open (6:00 am) 1.3090-94 Overnight Range 1.3081-1.3111 31Aug16

FX-At-A-Glance

NOTE: This chart represents gain (or loss) of G10 currencies vs. the US dollar from NY close (4::00pm) to Aug 31, 6:00 am EDT

August is ending with a whimper. USDCAD traded within a 0.0030 point range and opened in New York right where it closed, yesterday. Month-end rebalancing flows have so far been negligible which is expected to be the case for todays ”Fix” at 11:00 am.

Overnight, FX markets were very quiet. Aussie and Kiwi dipsy doodled within fairly narrow ranges while USDJPY didn’t stray too far from 103.00. Boston Fed President, Eric Rosengren and Chicago Fed President Charles Evans were speaking at the shanghai Advanced Institute. Mr. Rosengren sounded hawkish, saying “keeping interest rates low for a long time is not without risks”. Mr. Evans contradicted him when he said :he sees fewer financial stability concerns with the current low level of interest rates. FX traders didn’t to care, one way or the other.

In Europe, the Eurozone CPI index declined (Actual CPI-Aug. preliminary 0.2% vs. forecast 0.3%, y/y, Core-Actual 0.8% vs. forecast 0.9%, y/y)

FX markets will be watching today’s ADP Employment change report (forecast 175k) for clues to Friday’s nonfarm payrolls report. An upside surprise will keep the US dollar bid.

USDCAD traders will be watching GDP data. Canada Q2 GDP is expected to decline 1.5% q/q, largely due to the Alberta wildfires. That data shouldn’t have much impact on the Loonie as it is expected. However, the GDP data for June will be telling. It is expected to rise 0.4%. An upside surprise bodes well for the Bank of Canada’s Q3 forecast of 3.5%.

USDCAD technical outlook.

The intraday USDCAD technicals are bullish while trading above 1.3040 and looking to break resistance at 1.3110 to extend gains to 1.3190 and then 1.3250. A move below 1.3040 would target 1.2990 and suggest additional 1.2900-1.3100 consolidation. Longer term, the USDCAD uptrend from May remains intact while prices are above the 1.2750-70 zone. For today, USDCADS support is at 1.3060, 1.3030 and 1.3005. Resistance is at 1.3110 (overnight high) 1.3150 and 1.3190.

Today’s Range 1.3060-1.3150

Chart: USDCAD 30 minute

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Author: Loonieviews

In the past 30+ years, I have been an FX interbank market making trader, a high performing FX and Derivatives Sales person, creator of simple and complex risk mitigation strategies and a manager of high performance FX teams. The Trade of the Day is a culmination of that experience. Retail FX traders have access to a well-crafted and carefully researched FX trade strategy designed to generate FX profits while mitigating losses.

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