Home Daily Commentaries The Loonie rallies moderately, helped by U.S – China trade optimism.

The Loonie rallies moderately, helped by U.S – China trade optimism.

Daily Currency Update

The Loonie rallied overnight, at this moment the USD/CAD is falling –0.16% along with the US dollar index dipping this morning. Again, oil is still the primary driver of the USD/CAD’s performance, and there are no economic data scheduled for today after the Canadian and US banks were closed for a holiday yesterday.

The Canadian economy continues to perform well according to recent economic data, but substantial numbers have not been enough to boost a struggling Canadian dollar.

The technical levels to consider today in the USD/CAD are 1.3205 on the downside and 1.3250 on the upside.

Key Movers

The US dollar index declines by -0.34% this morning after touching an 18-month high yesterday at 97.69. A weaker US dollar this morning was driven by a positive market sentiment lifted by hopes that lingering trade tensions between the US and China would ease following reports that China’s top trade negotiator was preparing to visit the US ahead of a meeting between the two countries’ leaders later this month in Argentina. The US stock futures are rising this morning after a rebound from yesterday’s sell-off.

It was a different story in yesterday' trading session, when negative risk market sentiment brought North American indexes lower (S&P 500 -1.97%, Dow Jones -2.32%, and Nasdaq -2.78%) and pushed the greenback to new highs as a safe haven. Yesterday’s equity sell-off was also guided by concerns around Italy, the Brexit, and China, but, this is old news today.

The technical levels to consider for today for the US dollar index are 96.98 on the downside and 97.47 on the upside. The technical levels to consider today in the USD/CAD are 1.3205 on the downside and 1.3250 on the upside.

The EUR/USD is in a rally mode this morning after testing an 18-month low. Probably one of the reasons was the latest German ZEW Economic Sentiment survey, which was released overnight, and it was better than expected at -24.1 vs. a -24.2 read. Despite the improvement of this leading indicator of economic health in Germany, this index is in the seventh negative print in a row, as the booming economic situation Germany enjoyed around a year ago fades.

The slowdown in the German economy has been so dramatic that analysts are expecting growth to dip into negative territory for the first time since Q2 2014. The Q3 GDP figure is due to be published first thing tomorrow. Overall, Eurozone growth data is released three hours after the German number with the EZ expected to show anemic expansion of 0.2% for the third quarter. The Italian budget situation continues to rumble on in the background.

The technical levels to consider for today for the EUR/USD are 1.1255 on the downside and 1.1311 on the upside.

The Pound is getting hammered this morning against all its main pairs for over 1.5%. The failure to approve the Brexit deal in UK parliament will see very wild swings in the next hours or days.

Some of the most important headlines were the resignations of Brexit Secretary Dominic Raab, and Pensions Secretary Esther McVey. Also, the European Research Group of Tory MPs were to submit letters calling for a confidence vote in Theresa May's position.

The EUR/GBP pair increased 2.05 percent, from 0.8678, the lowest level in yesterday's session, to 0.8856 this morning, due to the weakness in the Pound.

Regarding the GBP/USD, the technical levels to consider for today are still very wide because of further Brexit new events coming. The level on the downside is 1.2600, and the level on the upside is 1.3175.

The AUD raised above the 0.7200 cent handle overnight amidst strong jobs data; specifically, the employment change in October released last night. The actual monthly data came in at 32.8 k vs. 20 k read, and the unemployment rate in October was published at 5.0% vs. 5.1% read. The automatic reaction was to push the Aussie higher, with AUD/USD reaching 0.7298, a one-week high.

Broader direction and focus remains with ongoing the US and China trade relations. As delegates discussions develop, we continue to see Yuan volatility influencing AUD flows.

The technical levels to consider for today in the AUD/USD are 0.7250 on the downside and 0.7361 on the upside.

The Kiwi climbed overnight, along with the Aussie dollar but with less impetus. The AUD/NZD hit a 19-months low's, and it is bouncing after good employment news in Australia and inexistent news in New Zealand. However, later today we will have business manufacturing PMI numbers.
For now, all eyes will be on the ongoing United States and China trade talks as it continues to boost risk-based currencies such as the Kiwi. The expectation for the NZD is to potentially rise as long as investors remain optimistic over upcoming developments.
The NZD/USD pair opens this morning just above the 0.6800 figure.

The technical levels to consider for today for the NZD/USD are 0.6800 on the downside and 0.6860 on the upside.

Expected Ranges

  • USD/CAD: 1.3205 - 1.3250 ▼
  • CAD/EUR: 0.6680 - 0.6725 ▼
  • CAD/GBP: 0.5800 - 0.5950 ▼
  • CAD/AUD: 1.0309 - 1.0450 ▲
  • CAD/NZD: 1.1031 - 1.1125 ▼