Loonieviews 1Sep16


Sterling takes a shine to PMI

USDCAD Open (6:00 am) 1.3090-94 Overnight Range 1.3081-1.3111 1Sept16

FX-At-A-Glance

NOTE: This chart represents gain (or loss) of G10 currencies vs the US dollar from NY close (4:00pm) to Sept. 1, 6:00 am EDT

USDCAD is starting the new month slightly higher than yesterday’s close and with a negative bias. A sidelined Bank of Canada in the face of a possibly more active Fed combined with a weak oil price outlook, have boosted the prospects for a higher USDCAD.

Sterling was the big mover In Europe. GBPUSD soared to 1.3264 from 1.3130 following the release of surprisingly strong Markit Purchasing Manager Index data. UK August PMI was 53.3, far exceeding the forecast of 49.0 and much improved over July’s 48.3. So much for Brexit destroying the UK economy. (Although it has been only been two months since the vote and no action has been taken) EURUSD remained rangebound and USDJPY added to gains carved out in Asia.

PMI reports were the focus in Asia as well. China is back in “expansion territory with a PMI of 50.3 but Japan isn’t. Japan’s PMI was only 49.5. The China data gave AUDUSD a boost but those gains were erased by a soft Retail Sales report. That move didn’t last and AUDUSD rebounded. USDJPY declined on the weak Japanese data but recovered those losses (and then some) in Europe.

Oil prices remained under pressure and failed to gain any traction despite comments from the Saudi Oil Minister suggesting that Opec is moving toward a “common position”. WTI is opening in New York at the overnight low of $44.56/b

There is a lot of US data on tap this morning. Jobless Claims, Construction Spending and ISM Manufacturing PMI will be closely scrutinized for fresh evidence that the US economy is rebounding which would lift the prospects for a September rate hike. However, concern ahead of Friday’s nonfarm payrolls report (forecast 180,000) should temper trading enthusiasm today.

USDCAD technical outlook.

The intraday USDCAD technicals are bullish while trading above 1.3090 and looking to break resistance at 1.3150 to extend gains to 1.3190 and then 1.3250. A move below 1.3080 would target 1.2990 and suggest additional 1.2900-1.3150 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 1.3090 and1.3060. Resistance is at 1.3150 and 1.3190.

Today’s Range 1.3190

Chart: USDCAD Daily

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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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