The U.S Dollar Hits Reverse Ahead of the ECB Monetary Policy Decision and Press Conference

Earlier in the Day:

It’s was a relatively busy start to the day on the economic calendar this morning. The Aussie Dollar and the Japanese Yen were in action early this morning.

Later this morning, the Bank of Japan delivers its first monetary policy decision of the year. While the markets expect the BoJ to continue to leave policy unchanged, the latest wave of the pandemic will be a concern.

Vaccination rates will need to materially pick up globally, not just in Japan, to support a sustained economic recovery.

Away from the economic calendar, sentiment towards the U.S economic outlook provided direction early on. Hopes of significant fiscal support drove demand for riskier assets early on.

For the Japanese Yen

The trade surplus widened from ¥366.1bn to ¥751.0bn in December 2020. Economists had forecast a widening to ¥942.8bn.

According to the Ministry of Finance,

  • Exports rose by 2.0% in the month of December, while imports slid by 11.6%.
  • For the calendar year, 2020, exports slid by 11.1%, with imports tumbling by 13.8% to leave the trade surplus at ¥674.73bn.

By geography,

  • Exports to Asia fell by 5.1%, in spite a 2.7% increase of exports to China. Imports from Asia saw a more marked 7.5% decline in the calendar year 2020.
  • To the U.S, exports tumbled by 17.3%, with imports from the U.S sliding by 14.0%.
  • Exports to Europe slid by 15.1%, driven by sizeable declines to Germany (-14.9%) and the UK (-24.3%). Imports fell by 13.7 from Europe in the calendar year.

The Japanese Yen moved from ¥103.547 to ¥103.572upon release of the figures. At the time of writing, the Japanese Yen was down by 0.01% to ¥103.55 against the U.S Dollar.

For the Aussie Dollar

Employment figures were in focus this morning.

According to the ABS,

  • Employment rose by 50k in December, following a 90.0k increase in November, which was in line with forecasts.
  • Full employment increased by 37.5k, following an 84.2k jump in November.
  • As a result, the unemployment rate slipped from 6.8% to 6.7%, while the participation rate rose from 66.1% to 66.2%.
  • Employment finished the year 0.7% below the March level, having fallen 6.7% between March and May.
  • The recovery in employment was largely as a result of a more marked recovery in part-time employment, however.

The Aussie Dollar moved from $0.77551 to $0.77516 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.27% to $0.7768.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.31% to $0.7194.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide the EUR with direction.

While there are no stats, the ECB is scheduled to deliver its first monetary policy decision of the year.

With the markets expecting the ECB to stand pat on policy, the ECB press conference will likely be the key driver.

Last week, ECB President Lagarde stood by the ECB’s growth forecasts for this year, in spite of extended lockdown measures.

We can expect plenty of discussion on price stability and the outlook during the presentation and the Q&A.

Away from the economic calendar, COVID-19 vaccine news along with the latest COVID-19 figures will provide direction.

At the time of writing, the EUR was up by 0.16% to $1.2125.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. CBI Industrial Trend Orders are due out later today.

With little else for the markets to consider, expect the stats to influence.

Ultimately, however, COVID-19 news updates will likely remain the key driver near-term.

At the time of writing, the Pound was up by 0.15% to $1.3674.

Across the Pond

It’s a busy day ahead on the economic calendar. Key stats include the weekly jobless claims figures and December’s Philly FED Manufacturing PMI.

Housing sector data for December, including building permits and housing starts are also due out. These will likely have a muted impact on risk sentiment, however.

Away from the economic calendar, President Biden’s first moves as U.S President together with COVID-19 news will also influence.

At the time of writing, the Dollar Spot Index was down by 0.15% to 90.340.

For the Loonie

It’s a quiet day on the economic data front. Economic data is limited to house price figures that will likely have a muted impact on the Loonie.

Chatter from Capitol Hill and COVID-19 news will be the key drivers on the day, with little else for the markets to consider.

At the time of writing, the Loonie was up by 0.13% to C$1.2620 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – Test Of Support At 1.2625

USD/CAD Video 20.01.21.

Canadian Dollar Gained Strong Upside Momentum

USD/CAD is testing the support level at 1.2625 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index is currently trading in the range between the support at the 20 EMA at 90.35 and the resistance at 90.50. If the U.S. Dollar Index settles below the 20 EMA, it will gain additional downside momentum and move towards the 90 level which will be bearish for USD/CAD.

Today, Canada reported that Inflation Rate decreased by 0.2% month-over-month in December. Analysts expected that Inflation Rate would remain unchanged. On a year-over-year basis, Inflaiton Rate grew by 0.7% compared to analyst consensus of 1%. Meanwhile, Core Inflation Rate increased by 1.5% year-over-year. Meanwhile, the Bank of Canada left the interest rate unchanged at 0.25%, in line with the analyst consensus.

Interestingly, today’s inauguration of Joe Biden had little impact on the dynamics of the U.S. dollar on the foreign exchange market. Perhaps, traders would like to see his first moves before evaluating the future trajectory of the American currency.

Today, commodity-related currencies like Canadian dollar received material support as oil gained ground on stimulus optimism. If WTI oil manages to settle above multi-month highs, Canadian dollar will get additional support.

Technical Analysis

usd cad january 20 2021

USD to CAD managed to get below the support at 1.2665 and tested the next support level at 1.2625. USD to CAD failed to settle below the support at 1.2625 on the first attempt, but it maintains good chances to get to another test of this support level. RSI is in the moderate territory, and there is plenty of room to gain additional downside momentum.

If USD to CAD settles below 1.2625, it will head towards the next support level at 1.2590. A successful test of this level will push USD to CAD towards the next support which is located at 1.2550.

On the upside, the previous support at 1.2665 will likely serve as the first resistance level for USD to CAD. A move above this level will push USD to CAD towards the resistance at 1.2700. If USD to CAD gets above 1.2700, it will head towards the resistance at 1.2720.

For a look at all of today’s economic events, check out our economic calendar.

Inauguration Day and the Bank of Canada Put the Greenback and the Loonie in Focus

Earlier in the Day:

It’s was a relatively busy start to the day on the economic calendar this morning. The Aussie Dollar and the PBoC were in action early this morning.

For the Aussie Dollar

The Westpac Consumer Confidence Index fell by 4.5% to 107.0 in January. In December, the Index had stood at 112.0.

According to the January report,

  • Domestic border closures and COVID-19 clusters together with a sharp rise in new COVID-19 cases overseas weighed on sentiment.
  • In spite of the fall, the index is up by 14.6% from a year ago and stood 41.5% higher than the pandemic low last April.

Looking at the key components:

  • Economic conditions next 12-months slid by 8.3%, with family finances vs a year ago falling by 7.0%.
  • In spite of the decline both were up compared with a year ago.
  • Family finances next 12-months saw a more modest 0.3% decline, with economic conditions next 5-years down by 4.5%.
  • Compared with this time last year, economic conditions next 5-years was up by 31.6%, with economic conditions next 12-months up by 21.1%.
  • Time to buy a major household item was down by 2.8%, while up by 4.8% compared with this time last year.
  • Time to buy a dwelling bucked the trend, however, rising by 0.2%. This was supported by sentiment towards house prices.
  • The House Price Expectations Index increased by 1.1%.
  • Sentiment towards unemployment was disappointing, however. The Unemployment Expectations Index was up by 11.9%, while down by 11.2% compared with a year ago.

The Aussie Dollar moved from $0.77100 to $0.77102 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.21% to $0.7711.

From China

This morning, the PBoC left loan prime rates unchanged in the central bank’s first monetary policy decision of the year.

In line with market expectations, the 1-year LPR remained unchanged at 3.85%, with the 5-year unchanged at 4.65%.

The Aussie Dollar moved from $0.77026 to $0.77072 upon announcement of the decision.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.13% to ¥103.77 against the U.S Dollar, with the Kiwi Dollar up by 0.04% to $0.7125.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. German wholesale inflation figures for December and finalized December inflation figures for the Eurozone are due out later today.

Barring marked revision from prelim Eurozone inflation figures, we don’t expect the stats to have too much influence, however.

Away from the economic calendar, COVID-19 vaccine news along with the latest COVID-19 figures and Italian politics will provide direction.

At the time of writing, the EUR was up by 0.10% to $1.2141.

For the Pound

It’s a relatively busy day ahead on the economic calendar. December inflation and wholesale inflation figures are due out of the UK later today.

A pickup in inflationary pressures should deliver support for the Pound. Wholesale inflationary pressures will also need to see a pickup, however.

While the stats will influence, the market focus will remain on the UK Government’s progress towards ending the COVID-19 pandemic.

At the time of writing, the Pound was up by 0.12% to $1.3647.

Across the Pond

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats to provide the Greenback and the broader markets with direction.

The lack of stats will leave the Greenback in the hands of chatter from Capitol Hill and COVID-19 news.

It’s Inauguration Day, so expect market focus to be on Capitol Hill. Upon entering the Oval Office, Biden is expected to begin repealing Trump policy.

At the time of writing, the Dollar Spot Index was down by 0.12% to 90.388.

For the Loonie

It’s a busy day on the economic data front. December inflation figures are due out ahead of the Bank of Canada’s first monetary policy decision of the year.

With the markets likely to hold out for the BoC rate statement and press conference, inflation figures will likely have a relatively muted impact on the Loonie.

Rising crude oil prices and optimism towards the economic outlook is likely to leave the BoC in a holding pattern. It remains to be seen, however, whether there’s any hawkish chatter.

At the time of writing, the Loonie was up by 0.11% to C$1.2721 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – U.S. Dollar Is Under Pressure

USD/CAD Video 19.01.21.

Canadian Dollar Moves Higher Against U.S. Dollar

USD/CAD found itself under pressure and moved below the 20 EMA at 1.2745 while the U.S. dollar lost some ground against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle below 90.50 but received support near 90.40 and rebounded back above 90.50. If the U.S. Dollar Index manages to get to the test of the next support level which is located at the 20 EMA at 90.30, USD/CAD will find itself under pressure.

Today, Canada reported that Manufacturing Sales declined by 0.6% month-over-month in November compared to analyst consensus which called for a decline of just 0.1%. Meanwhile, Wholesale Sales increased by 0.7% compared to analyst forecast which called for growth of 1%.

Tomorrow, foreign exchange market traders will focus on Bank of Canada’s Interest Rate Decision and the subsequent commentary. It remains to be seen whether Bank of Canada will hint that it is ready to provide additional stimulus.

Meanwhile, the U.S. Treasury Secretary nominee Janet Yellen has just told U.S. lawmakers to “act big” on the new coronavirus aid package. The new round of U.S. stimulus may ultimately put additional pressure on the American currency, but dollar bears have failed to push dollar to new lows at the beginning of this year.

Technical Analysis

usd cad january 19 2021

USD to CAD declined below the 20 EMA at 1.2745 and is testing the next support level at 1.2720. If this test is successful, USD to CAD will move towards the next resistance at 1.2700. In case USD to CAD manages to settle below the support at 1.2700, it will head towards the next support level at 1.2665.

On the upside, USD to CAD needs to get back above the 20 EMA to have a chance to develop upside momentum. The next resistance level is located at 1.2775. If USD to CAD settles above this level, it will move towards the resistance at 1.2800.

From a big picture point of view, USD to CAD is stuck in the range between the support at 1.2700 and the resistance at 1.2800. Most likely, it will need additional catalysts to get out of this range.

For a look at all of today’s economic events, check out our economic calendar.

Even When She Speaks Softly, She’s Yellen

After posting the first back-to-back decline this year, the MSCI Asia Pacific Index bounced back today, led by a 2.7% gain in Hong Kong (20-month high) and a 2.6% rise in South Korea’s Kospi. The Nikkei and Taiwan’s Stock Exchange rose by more than 1%. Europe’s Dow Jones Stoxx 600 eked out a small gain yesterday and is a little higher today. The S&P 500 fell in the last two sessions for a loss of a little more than 1% and is trading about 0.6% better now.

The US 10-year is firm at 1.11%, while European bonds are little changed, and the periphery is doing better than the core. Of note, France’s 50-year bond sale was greeted with a record reception. The dollar is lower against all the major currencies, but the yen. Most emerging market currencies are firmer as well. We see the dollar’s pullback as part of the larger correction that began almost two weeks ago.. Gold recovered smartly from yesterday’s test on $1800 to return to the 200-day moving average (~$1845). February WTI reversed lower ahead of the long holiday weekend and made a marginal new low today (~$51.75) before recovering nearly a dollar.

Asia Pacific

According to the recent government data, China’s rare earth exports fell by more than a quarter to what Reuters estimates are the lowest in five years. China attributed it to weaker global demand, but there is something else going on. Yesterday, China indicated that a new mechanism will be created to decide, coordinate, and regulate the rare earth supply chain (including mining, processes, and exporting).

Rather than exporting rare earths, China’s industrial policy aims to export products containing rare earths. Move up the value-added chain. The big push now apparently is for batteries for electric vehicles. The PRC has become a net importer of rare earths that it processes. Its imports often come from mines it owns outright or has an important stake. For example, the Democratic Republic of Congo is responsible for 60% of the world’s cobalt.

There are 12 mines, and reports suggest China has a stake in each, and more than 85% of the cobalt exports are headed to China. In 2018, China provided around 80% of US rare earths, and at least one mine in the US sends the material to China to be processed.

For the past several sessions, the dollar has forged a base in the JPY103.50-JPY103.60 area and is probing the JPY104.00 level. The high from January 14 was about JPY104.20, and there is an option for roughly $360 mln at JPY104.35 that expires later today, just shy of last week’s high near JPY104.40. The Australian dollar closed below its 20-day moving average yesterday (~$0.7100) for the first time in a little more than two months.

It rebounded earlier today to $0.7725. The session high may not be in place, and we suspect there is potential toward $0.7740. The dollar’s reference rate was set at CNY6.4883, practically spot-on median expectations in the Bloomberg survey of bank models. The dollar’s four-day advance was snapped today. It has risen from almost CNY6.45 and stalled in front of CNY6.50. Faced with an increase in interbank borrowing costs for the ninth consecutive session, the PBOC injected CNY75 bln in seven-day cash via repo agreements.

It is the first injection after draining for the past six sessions, and it was the largest supply of funds this month. Some liquidity appears to be going into equities, and Chinese traders reportedly bought a record $3.4 bln of HK shares today.

Europe

Despite Germany’s social restrictions, which may be tightened and extended, business sentiment held in better than feared. The ZEW survey assessment of current conditions did not deteriorate as economists expected, though it did not really improve, either. The -66.4 reading compares with -66.5 in December. However, the expectations component rose to 61.8 from 55.0. This is the highest since September and more than anticipated.

The UK Prime Minister, who holds the rotating G7 presidency, has invited South Korea, India, and Australia to the summit in June. Moreover, reports suggest Johnson intends on getting them involved right away, which seems aggressive. It appears to be causing some consternation among other members. Germany, Japan, France, and Italy are opposed.

Italy’s Prime Minister Conte survived the vote of confidence in the Chamber of Deputies yesterday, and today’s challenge is in the Senate. The government support is thinner. However, the ability to secure a majority is somewhat easier given that Renzi’s party will abstain, though it will still be close. A defeat could see Italian bonds sell-off, but Conte will seek to broaden the coalition in the existing parliament before elections are required. This could include independents or members of center-right parties.

Two central bank intervention announcements last week caught our attention. First, Sweden’s Riksbank announced a three-year plan to purchase SEK5 bln a month. The purpose is to fund reserve purchases in SEK and pay down the SEK178 bln fx loans from the National Debt Office, which is thought to be about 70% in US dollars.

The krona was trending lower this year against both the dollar and euro, which follows the krona’s appreciation in the last few months of 2020. The impact is minor in terms of average daily turnover, estimated to be around SEK300-SEK320 bln almost equally divided between euros and dollars.

Second, the Israeli shekel soared in recent months and reached levels not seen since Q1 1996. The Bank of Israel intervened and bought $21 bln in all of 2020, with almost $4.5 bln in December alone, and still the shekel appreciated by 7.5% and nearly 3%, respectively. Businesses and investors were crying for relief. The central bank announced it would buy $30 bln this year, which triggered a powerful short-covering rally that carried the dollar from nearly ILS3.11 to almost ILS3.29 by the end of last week.

Dollar sellers emerged yesterday. It is steadier today, but in wider ranges than typically seen before. Its preannounced intervention war chest may ultimately prove insufficient to prevent shekel appreciation. The $30 bln is roughly twice its current account surplus, but foreign direct investment inflows are nearly the same size as the current account surplus. And yet, net portfolio inflows should be expected, but most importantly, how Israeli offshore investment is managed can be impactful.

Profit-taking on foreign investments or hedging the currency risk, even on a small fraction of the roughly $470 bln of foreign stocks and bonds owned by Israelis, can be a significant force rivaling the current account and direct investment-related flows.

The euro was sold a little below $1.2060 yesterday, its lowest level since December 1st. It reached $1.2130 in the European morning, and the $1.2140 area is the halfway point of last week’s decline. The bounce has left the euro’s intraday momentum indicator stretched.

We expect North American dealers will take advantage of the upticks for a better selling opportunity. Also, note there are around 4.1 bln euros of $1.2190-$1.2200 options that roll-off today. Sterling recovered a little more than a cent from yesterday’s lows (~$1.3520) to today’s high. It faces resistance near $1.3635. Tomorrow the UK reports December CPI figures, and a small uptick is expected.

America

The Senate holds the confirmation hearing for Yellen. She was the first woman to head the Federal Reserve, and she will be the first woman to lead the US Treasury, and the first person to have held both posts. It is a reflection of our age. Like the current Federal Reserve, the former Chair can be expected to recognize the need for fiscal support, while at the same time acknowledging that deficits will decline on the other side of the emergency.

The stock of debt is elevated, but it not extreme in relative or absolute terms. Despite higher debt in 2020, the servicing costs appear to have fallen. Moreover, as the economy grows faster than the level of interest rates, debt will decline as a percentage of GDP. Her remarks on the dollar will be scrutinized. To demonstrate the Biden Administration’s multilateral thrust, at this juncture, it is sufficient for Yellen to acknowledge the G7/G20 position that exchange rates are best set by the market.

At the end of last year, the US Treasury cited Switzerland and Vietnam as currency manipulators. She may be asked about those, and of course, the yuan. The new US Treasury model had the yuan a few percentage points undervalued. However, it is interesting to note that when adjusted for GDP per capita, The Economist Big Mac index of purchasing power parity has the yuan slightly (~2.5%) overvalued.

The economic calendars for North America are light today. The Treasury’s International Capital (TIC) for November will be reported today at the end of equity trading. Capital flows were volatile at the onset of the pandemic, but long-term inflows averaged $23.56 bln in the first ten months of 2020 compared with an average of $27.21 bln in the same period in 2019 and $54.32 bln in the Jan-Oct period in 2018.

The week’s highlight includes the January Philadelphia Fed survey Thursday and weekly jobless claims, as well as Friday’s preliminary PMI. Canada reports the December CPI tomorrow, shortly before the outcome of the Bank of Canada meeting is announced. Although the consensus is for a standpat outcome, a “mini-cut” cannot be ruled out given the official rhetoric. The current overnight target rate is 25 bp. The main feature for Mexico is the December unemployment figures on Thursday. Brazil’s central bank meets tomorrow, and the is little chance of a change in the 2% Selic rate.

Last Thursday, the US dollar recorded its lowest level against the Canadian dollar since April 2018 (~CAD1.2625). Between the modest greenback strength seen yesterday and expectations that Biden cancels the XL pipeline, the US dollar tested CAD1.28. It has come back offered today and is testing the CAD1.2720 area in the European morning.

It can fall a bit further in the North American session, but we look for support in the CAD1.2690 area to hold. That said, a break could signal a move toward CAD1.2640. The greenback held below MXN20.00 yesterday and reversed lower, closing a little under MXN19.69. It has taken out yesterday’s low (~MXN19.66) but struggles to maintain the downside momentum. A move above MXN19.75 would suggest a return to MXN20.00 is likely.

The dollar fell from BRL5.5160 last week, its highest level since mid-Movember, to BRL5.20. The low from earlier this month was around BRL5.12, and there is scope for a re-test.

This article was written by Marc Chandler, MarctoMarket.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data Puts the EUR and the Loonie in Focus as Inauguration Day Nears

Earlier in the Day:

It’s was a relatively quiet start to the day on the economic calendar this morning. The Kiwi Dollar was in action early this morning.

For the Kiwi Dollar

Business confidence picked up in the 4th quarter of 2020.

According to the NZIER Quarterly Report,

  • A net 16% of businesses expect a deterioration in general economic conditions over the coming months. This was lower than the 38% in the previous quarter and well below the 68% in March 2020.
  • The building sector delivered strong optimism, while other sectors saw some improvement.
  • Away from the construction sector, businesses were reportedly still cautious about general economic conditions ahead.
  • While demand has improved, firms are still finding it difficult to pass on rising costs by raising prices.
  • Despite resulting weak profitability, increased certainty about the outlook supported hiring and investment.
  • A net 15% of firms are planning to hire in the next quarter, with a net 10% planning to invest in plant and machinery.

The Kiwi Dollar moved from $0.71122 to $0.71118 upon release of the figures that preceded retail sales figures.

In December, electronic card retail sales rose by 3.5% compared with December 2019. In November, sales had increased by 1.4%, year-on-year.

According to NZ Stats,

  • Spending on groceries, furniture, and electronics drove sales, while accommodation and fuel spending dragged.
  • Retail spending rose in 4 of the 6 industries in December 2020 compared with December 2019.
  • Consumables had the largest retail sector increase, rising by 7.5%, followed by spending on durables, which increased by 6.7%.
  • Spending on eating out increased by a relatively modest 1.8%. In spite of containment measures, domestic tourism delivered support.
  • By contrast, spending on hotels, motels, and other accommodation was down by 32% due to a lack of international tourists.

The Kiwi Dollar moved from $0.71120 to $0.71051 upon release of the figures. At the time of writing, the Kiwi Dollar up by 0.25% to $0.7128.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.02% to ¥103.71 against the U.S Dollar, while the Aussie Dollar was up by 0.22% to $0.7698.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Finalized December inflation figures from Germany and ZEW economic sentiment figures for Germany and the Eurozone are due out.

Expect Germany’s ZEW Economic Sentiment figure for January to be the key driver.

Away from the economic calendar, COVID-19 vaccine news along with the latest COVID-19 figures will also influence.

On the political front, the Italian government faces a Senate vote later today that will decide Conte’s fate. On Monday, the Chamber of Deputies voted in favor of Conte’s government following the coalition breakdown.

A political crisis on top of the COVID-19 pandemic would pressure the EUR.

At the time of writing, the EUR was up by 0.09% to $1.2088.

For the Pound

It’s another quiet day ahead on the economic calendar, with no material stats due out to provide the Pound with direction.

The lack of stats will continue to leave COVID-19 news to provide direction.

At the time of writing, the Pound was up by 0.06% to $1.3595.

Across the Pond

It’s another particularly quiet day ahead on the economic calendar after Monday’s market close.

The lack of stats will leave the Greenback in the hands of chatter from Capitol Hill and COVID-19 news.

At the time of writing, the Dollar Spot Index was down by 0.06% to 90.713.

For the Loonie

It’s a relatively busy day on the economic data front. Manufacturing sales and wholesales figures for November are due out later today.

The numbers are unlikely to have a material impact on the Loonie, however.

COVID-19 news updates from China and the U.S will likely remain the key drivers on the day.

At the time of writing, the Loonie was up by 0.17% to C$1.2735 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – Resistance At 1.2800 Stays Strong

USD/CAD Video 18.01.21.

U.S. Dollar Is Gaining Some Ground Against Canadian Dollar

USD/CAD has recently made an attempt to settle above 1.2800 but pulled back closer to the support level at 1.2750 while the U.S. dollar was mostly flat against a broad basket of currencies.

The U.S. Dollar Index tried to settle above the resistance at the 50 EMA at 90.95 but failed to develop sufficient upside momentum and pulled back towards 90.80. The nearest support level for the U.S. Dollar Index is located at 90.70. If the U.S. Dollar Index declines below this level, it will head towards the support at 90.50 which will be bearish for USD/CAD.

Today, Canada reported that Housing Starts declined from 259,900 in November to 228,300 in December. It should be noted that Housing Starts remain at rather high levels so it’s too early to tell whether Canada’s housing market has started to slow down due to the second wave of the virus.

In the upcoming trading sessions, foreign exchange market traders will likely focus on the first moves of the U.S. President-elect Joe Biden. It remains to be seen whether his $1.9 trillion stimulus program will put additional pressure on the American currency.

Technical Analysis

usd cad january 18 2021

USD to CAD faced strong resistance at 1.2800 and pulled back. Currently, USD to CAD needs to settle back above 1.2775 to have a chance to get to the test of the resistance at 1.2800.

If USD to CAD manages to settle above 1.2800, it will move towards the next resistance level which is located near the 50 EMA at 1.2835. A move above this level will push USD to CAD towards the resistance at 1.2860.

On the support side, the nearest support level for USD to CAD is located at the 20 EMA at 1.2750. If USD to CAD declines below this level, it will head towards the next support level at 1.2720. In case USD to CAD manages to settle below the support at 1.2720, it will get to the test of the next support level which is located at 1.2700.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data from China to Set the Tone for the Day

Earlier in the Day:

It’s was a quiet start to the day on the economic calendar this morning. There were no material stats to provide the markets with direction in the early hours. Later this morning, however, economic data from China will set the tone.

Key stats due out of China later this morning include 4th quarter GDP figures along with industrial production and retail sales numbers.

Unemployment and fixed asset investment figures for December are also due out but will likely have a muted impact on risk sentiment.

For the Majors

At the time of writing, the Aussie Dollar was down by 0.13% to $0.7693, with the Kiwi Dollar down by 0.11% to $0.7125.

The Japanese Yen was up by 0.06% to ¥103.79 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. Finalized December inflation figures from Italy are due out.

The numbers are unlikely to influence, however.

Expect COVID-19 news and updates from Rome to influence. Political uncertainty, amidst the COVID-19 pandemic, will test EUR support. Conte will now need to avoid going back to the polls…

At the time of writing, the EUR was down by 0.06% to $1.2075.

For the Pound

It’s a quiet day ahead on the economic calendar. There are no material stats due out to provide the Pound with direction.

The lack of stats will leave COVID-19 news to provide direction. A pickup in vaccination rates should provide support, though the markets will need to see new cases begin to fall.

At the time of writing, the Pound was down by 0.07% to $1.3580.

Across the Pond

It’s a particularly quiet day ahead on the economic calendar, with the U.S markets closed today.

The lack of stats will leave the Greenback in the hands of market risk sentiment and COVID-19 news.

At the time of writing, the Dollar Spot Index was up by 0.03% to 90.800.

For the Loonie

It’s another quiet day on the economic data front. Housing start figures for December are due out later today.

The numbers are unlikely to have a material impact on the Loonie ahead of Wednesday’s monetary policy decision.

Economic data from China and COVID-19 news updates will likely be the key drivers on the day.

At the time of writing, the Loonie was down by 0.26% to C$1.2765 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – U.S Politics, Monetary Policy, Economic Data, and COVID-19 in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 73 stats in focus in the week ending 22nd January. In the week prior, 46 stats had been in focus.

For the Dollar:

It’s a quiet week ahead on the economic data front.

In a shortened week, there are no material stats to consider in the 1st half of the week.

Through Thursday, Philly FED Manufacturing PMI and weekly jobless claims figures are in focus.

With market attention to labor market conditions, expect the jobless claims to have the biggest impact. Another jump in jobless claims would likely weigh on riskier assets.

At the end of the week, prelim private sector PMI figures for January wrap things up.

Housing sector data also due out in the week will likely have a muted impact on the Dollar and risk sentiment.

The Dollar Spot Index ended the week up by 0.75% to 90.772.

For the EUR:

It’s a busy week ahead on the economic data front.

On Tuesday, January ZEW Economic Sentiment figures for Germany and the Eurozone kick things off.

Germany’s ZEW Economic Sentiment indicator will likely be the key driver.

The focus will then shift to January prelim private sector PMI numbers on Friday. France, Germany, and the Eurozone’s private sectors will be in the spotlight on.

Expect Germany’s manufacturing and the Eurozone’s composite to be the key drivers.

Finalized December inflation figures for member states and the Eurozone, also due out in the week, will likely have a muted impact on the EUR.

On the monetary policy front, the ECB is in action on Thursday. No moves are expected, leaving the press conference as the key driver. Questions on the economic outlook are likely as EU member states extend lockdown periods.

The EUR ended the week down by 1.11% to $1.2082.

For the Pound:

It’s a relatively busy week ahead on the economic calendar. Key stats include December inflation and retail sales figures, CBI industrial trend orders, and prelim January private sector PMIs.

Expect the retail sales figures and services PMI, due out on Friday, to have the greatest influence.

Away from the economic calendar, COVID-19 news will also influence. Following the vaccine approvals, the markets will be looking for new COVID-19 cases to begin abating.

On the monetary policy front, BoE Governor is scheduled to speak on Wednesday.

The Pound ended the week up by 0.16% to $1.3590.

For the Loonie:

It’s a busy week ahead on the economic calendar.

Key stats include December inflation and November retail sales figures due out on Wednesday and Friday.

Other stats include housing stats, manufacturing and wholesale sales figures. We would expect these stats to have a muted impact on the Loonie, however.

On the monetary policy front, the BoC is in action on Wednesday. With the markets expecting the BoC to hold rates steady, the rate statement and press conference will be the key drivers.

From elsewhere, economic data from China and private sector PMIs from the Eurozone and the U.S will also influence.

Expect COVID-19 news updates and chatter from Capitol Hill to also provide direction.

The Loonie ended the week down by 0.24% to C$1.2732 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a busier week on the economic data front.

Consumer sentiment figures for January are due out on Wednesday.

With consumer confidence key to fueling a pickup in consumer spending and an economic recovery, expect Aussie Dollar sensitivity to the numbers.

On Thursday, December employment figures will also provide direction ahead of retail sales figures on Friday.

Economic data from China and private sector PMI numbers from the U.S and the Eurozone will also influence.

COVID-19 news updates will remain a key driver in the week. however.

The Aussie Dollar ended the week down by 0.70% to $0.7703.

For the Kiwi Dollar:

It’s a quiet week ahead on the economic calendar.

In the 1st half of the week, 4th quarter business confidence and electronic card retail sales figures are in focus on Tuesday.

At the end of the week, Business PMI and 4th quarter inflation figures wrap things up.

Expect business confidence, retail sales, and 4th quarter inflation figures to be the key drivers.

The Kiwi Dollar ended the week down by 1.51% to $0.7133.

For the Japanese Yen:

It is a busy week ahead.

Finalized November industrial production figures get things going on Monday.

On Thursday, December trade figures will draw plenty of attention. With the COVID-19 pandemic continuing to wreak havoc, weak numbers could test market risk appetite.

At the end of the week, December inflation figures and prelim private sector PMIs for January wrap things up. The PMI numbers should have greater influence at the end of the week.

On the monetary policy front, the BoJ is in action on Thursday.

The Japanese Yen ended the week up by 0.09% to ¥103.85 against the U.S Dollar.

Out of China

It’s also a busy week ahead.

December industrial production and 4th quarter GDP numbers are due out on Monday. These will be the key stats of the week.

Other stats include fixed asset investment, retail sales, and unemployment figures. Barring dire numbers, however, these stats should have limited impact on market risk sentiment.

On Wednesday, the PBoC is also in action. However, the markets are not expecting any moves.

The Chinese Yuan ended the week down by 0.10% to CNY6.4809 against the U.S Dollar.

Geo-Politics

U.S Politics

It’s a busy week on Capitol Hill.

Inauguration Day and Trump’s impeachment will draw interest.

COVID-19

Vaccination rates and availability of vaccines will be key areas of interest.

An upward trend in vaccination rates and a downward trend on infection rates would support optimism towards an economic recovery.

Corporate Earnings

A number of big names deliver results in the week ahead.

From the U.S

These include:

Bank of America (Tues)

Goldman Sachs Group (Tues),

Netflix (Tues)

United Airlines (Wed)

Morgan Stanley (Wed)

Intel Corp. (Thurs).

The Weekly Wrap – COVID-19, Economic Data, and U.S Stimulus Weigh on Riskier Assets

The Stats

It was a relatively busy week on the economic calendar, in the week ending 15th January.

A total of 46 stats were monitored, following 61 stats from the week prior.

Of the 46 stats, 21 came in ahead forecasts, with 17 economic indicators coming up short of forecasts. There were 8 stats that were in line with forecasts in the week.

Looking at the numbers, 17 of the stats reflected an upward trend from previous figures. Of the remaining 29 stats, 23 reflected a deterioration from previous.

For the Greenback, it was a 2nd consecutive weekly gain, with the Dollar Spot Index rising by 0.75% to $90.772. In the previous week, the Dollar had risen 0.18% to 90.098.

Out of the U.S

It was a relatively busy week on the economic data front.

It was a quiet 1st half of the week, however, with stats limited to JOLTs job openings and inflation figures.

While job openings fell in November, inflation held steady, with the annual rate of core inflation holding at 1.6%.

Consumer prices rose by 0.4%, month-on-month, while core consumer prices increased by a modest 0.1%.

In a busy 2nd half of the week, key stats included the weekly jobless claims, retail sales, and consumer sentiment figures.

Jobless claims figure disappointed on Thursday, with initial jobless claims jumping from 784k to 965k.

In December, core retail sales slid by 1.4%, with retail sales falling by 0.7%, both following on from declines in November.

Consumer sentiment figures also disappointed.

According to prelim figures, the Michigan Consumer Sentiment Index fell from 80.7 to 79.2.

The downside was limited, however, supported by COVID-19 vaccines and hopes of a bipartisan shift.

The survey noted that the fall was minor when considering the sharp rise in COVID-19 related deaths, insurrection, and Trump’s impeachment.

Other stats included industrial production, NY Empire State Manufacturing, and business inventory figures. These stats had limited impact on the markets, however.

On the monetary policy front, FED Chair Powell assured the markets that rates were not going up any time soon. The FED Chair also stated that there would be no tapering of bond purchases near-term.

In the equity markets, the NASDAQ and the S&P500 slid by 1.54% and by 1.48% respectively. The Dow fell by a more modest 0.91%.

Out of the UK

It was a relatively busy week on the economic data front.

Monday through Thursday economic data was limited to BRC retail sales and RICS house price figures.

Retail sales rose by a further 4.8% in December, following a 7.7% rise in November according to the BRC.

House prices were also on an upward trend, with the RICS house price balance coming in at 65%. While down marginally from October’s 66%, upward pressure on house prices is expected to remain.

At the end of the week, industrial and manufacturing production and GDP figures were in focus.

In November, industrial production fell by 0.1%, following a 1.1% rise in October. Manufacturing production rose by 0.7%, following a 1.6% increase in October. Both fell short of forecasts.

GDP figures were not much better. In November, the economy contracted by 2.6% reversing 0.4% growth from October. On a 3-month rolling basis, the economy grew by 4.1%, slowing from a 10.2% to October.

Trade data released on Friday had a muted impact on the Pound, however. In November, the trade deficit widened from £13.29bn to £16.01bn, with the non-EU deficit widening from £5.82bn to £8.01bn.

Away from the economic calendar, a pickup in vaccination rates in the UK offset the negative sentiment towards lockdown measures.

In the week, the Pound rose by 0.16% to $1.3590. In the week prior, the Pound had fallen by 0.76% to $1.3568. A 0.72% slide on Friday pared some of the gains from earlier in the week.

The FTSE100 ended the week down by 2.00%, partially reversing a 6.39% gain from the previous week.

Out of the Eurozone

It was a relatively quiet week on the economic data front.

Industrial production and trade figures for the Eurozone, together with full year GDP numbers for Germany were in focus.

It was a mixed set of numbers for the EUR and the European majors.

For the Eurozone, industrial production jumped by 2.5% in November, following a 2.3% increase in October.

Trade data disappointed, however, with the trade surplus narrowing from €30.0bn to €25.8bn in November. Weak numbers were expected, however, following Germany’s trade data from last week.

While economic data from Germany has been impressive of late, GDP figures disappointed.

For the full year 2020, the economy contracted by 5.0%, following 0.6% growth in 2019. Economists had forecasted a 5.1% fall, however, which limited the damage.

ECB President Lagarde had spoken the day before the release of the GDP numbers. Lagarde continued to stand by the ECB’s economic forecasts, in spite of the extended lockdown measures in the EU. Lagarde pointed out that the forecasts had factored in lockdowns through the 1st quarter.

At the end of the week, finalized inflation figures for France and Spain had a muted impact on the EUR.

On the monetary policy front, the ECB’s monetary policy meeting minutes also failed to move the dial in the week.

For the week, the EUR slid by 1.11% to $1.2082. In the week prior, the EUR had risen by 0.02% to $1.2218.

For the European major indexes, it was a bearish week. The EuroStoxx600 fell by 0.81%, with the CAC40 and DAX30 sliding by 1.67% and 1.86% respectively.

A continued spike in new COVID-19 cases weighed. Across the EU, member states were reporting particularly low vaccination rates that added to the negative mood.

For the Loonie

It was a particularly quiet week on the economic data front. There were no material stats to provide the Loonie with direction.

At the start of the week, the BoC’s Business Outlook Survey failed to move the dial.

Market optimism, fueled by expectations of a sizeable U.S stimulus package, had supported crude oil prices and the Loonie.

A Friday sell-off, however, left the Loonie in the red. Concerns over the COVID-19 pandemic and market reaction to the Biden stimulus package weighed on riskier assets.

In the week ending 15th January, the Loonie fell by 0.24% to C$1.2732. In the week prior, the Loonie had risen by 0.2% to C$1.2702.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar, following solid gains from the previous week.

In the week ending 15th January the Aussie Dollar fell by 0.70% to $0.7703, with the Kiwi Dollar ended the week down by 1.51% to $0.7133.

For the Aussie Dollar

It was a quiet week on the economic calendar.

November retail sales, building permit, and new home loan figures were in focus in the week.

Retail sales impressed in November, supported by an easing of containment measures in Victoria. Sales jumped by 7.1%, following a 1.4% rise in October.

Building permits rose by 2.6%, following a 3.3% increase in October, with new home loans surging by 5.5%.

Home loans hit a record high mid-way through the 4th quarter.

From elsewhere, trade data from China also provided support, with imports and exports on the rise in December.

For the Kiwi Dollar

It was also a particularly quiet week on the economic calendar.

There were no material stats from New Zealand to provide the Kiwi Dollar with direction.

For the Japanese Yen

It was a relatively quiet week on the economic calendar. Core machinery orders were in focus in the week.

Month-on-month, orders rose by 1.5% in November, following October’s 17.1% surge. Economists had forecast a 6.2% slide. Year-on-year, orders were down by 11.3%, after having risen by 2.8% in October. Economists had forecast a more severe 15.4% slump.

The stats ultimately had a muted impact on the Japanese Yen, however. COVID-19 news and chatter from Capitol Hill remained key drivers in the week.

The Japanese Yen rose by 0.09% to ¥103.85 against the U.S Dollar. In the week prior, the Yen had fallen by 0.72% to ¥103.94.

Out of China

Inflation and trade data for December were in focus.

The stats were skewed to the positive, supporting riskier assets in the week.

Inflationary pressures returned at the end of the year, with consumer prices rising by 0.7%, month-on-month. In November, consumer prices had fallen by 0.6%. As a result, consumer prices were up by 0.2% year-on-year, partially reversing a 0.5% decline from November.

Wholesale deflationary pressures also eased at the end of the year.

Trade data was more impressive, however, with exports surging by 19.1% following a 21.1% jump in November. Imports increased by 6.5%, leading to a widening in the USD trade surplus from $75.4bn to $78.16bn.

While the stats were positive, a spike in new COVID-19 cases in China was a concern in the week.

In the week ending 15th January, the Chinese Yuan fell by 0.10% to CNY6.4809. In the week prior, the Yuan had risen by 0.81% to CNY6.4746.

The CSI300 slipped by 0.68%, while the Hang Seng ended the week up by 2.50%.

USD/CAD Daily Forecast – U.S. Dollar Rebounds Ahead Of The Weekend

USD/CAD Video 15.01.21.

Canadian Dollar Is Losing Ground Against U.S. Dollar

USD/CAD gained strong upside momentum while the U.S. dollar gained ground against a broad basket of currencies.

The U.S. Dollar Index managed to get above the resistance at 90.50 and tested the next resistance level at 90.70 but failed to develop sufficient upside momentum and pulled back towards 90.60. If the U.S. Dollar Index settles above 90.70, it will move towards the 50 EMA at 90.95 which will be bullish for USD/CAD.

Today, U.S. reported that Retail Sales declined by 0.7% month-over-month in December as the second wave of the virus put pressure on consumers.

Meanwhile, U.S. Industrial Production increased by 1.6% month-over-month in December compared to analyst consensus which called for growth of 0.5%. Manufacturing Production was also better than expected as it grew by 0.9% compared to analyst consensus of 0.5%.

Today, commodity-related currencies found themselves under pressure on foreign exchange market as oil and other commodities gained downside momentum. If this sell-off continues, Canadian dollar will move lower.

Technical Analysis

usd cad january 15 2021

USD to CAD made an attempt to settle above the resistance level at 1.2750 but pulled back towards 1.2720. If USD to CAD manages to stay above 1.2720, it will head towards the next resistance level at the 20 EMA at 1.2740.

A move above this level will push USD to CAD towards the resistance at 1.2750, so USD to CAD may face material resistance in the 1.2740 – 1.2750 area.

If USD to CAD manages to settle above the resistance at 1.2750, it will head towards the next resistance level which is located at 1.2775.

On the support side, the nearest support level for USD to CAD is located at 1.2700. If USD to CAD declines below this level, it will move towards the support at 1.2665. A successful test of this level will open the way to the test of the next support which is located near the recent lows at 1.2625.

From a big picture point of view, the current rebound is a major disappointment for USD to CAD bears as USD to CAD failed to settle below 1.2625 for the second time in January.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data Puts the Pound and the Dollar in the Spotlight, with COVID-19 News also in Focus

Earlier in the Day:

It’s was a quiet start to the day on the economic calendar this morning. The Aussie Dollar was in action in the early hours.

For the Aussie Dollar

Homes loans jumped by 5.5% in November, following a 0.8% rise in October. Economists had forecast a 0.5% increase.

According to the ABS,

  • The total value of new loan commitments for housing and the value of owner occupier home loan commitments hit record highs in November 2020.
  • Year-on-year, the value of new owner home loan commitments was 31.4% higher.

The Aussie Dollar moved from $0.77855 to $0.77792 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.04% to $0.7775.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.06% to ¥103.74 against the U.S Dollar, with the Kiwi Dollar up by 0.07% to $0.7216.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. November trade data for the Eurozone is due out later today.

Finalized December inflation figures for France and Spain are also due out but should have a muted impact on the EUR.

Away from the economic calendar, expect COVID-19 news to continue to influence sentiment towards the economic outlook.

At the time of writing, the EUR was down by 0.02% to $1.2153.

For the Pound

It’s a busy day ahead on the economic calendar. Key stats include industrial and manufacturing production and GDP figures for November.

Trade data is also due out but will likely have a muted impact on the Pound.

Away from the economic calendar, any COVID-19 vaccination news will also provide direction.

At the time of writing, the Pound was down by 0.01% to $1.3688.

Across the Pond

It’s a particularly busy day ahead on the economic calendar. Key stats include December retail sales and industrial production figures and prelim January consumer sentiment numbers.

Expect consumer sentiment and retail sales figures to have the greatest impact on market risk sentiment.

NY Empire State Manufacturing, wholesale inflation, and business inventory figures are also due out. We would expect these to have a muted impact on the Dollar and market risk sentiment, however.

Away from the economic calendar, expect chatter from Capitol Hill to remain a key driver.

At the time of writing, the Dollar Spot Index was up by 0.02% to 90.256.

For the Loonie

It’s another quiet day on the economic data front, with no material stats due out to provide the markets with direction.

The lack of stats will leave the Loonie in the hands of market risk sentiment on the day.

At the time of writing, the Loonie was down by 0.03% to C$1.2644 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – Support At 1.2625 In Sight

USD/CAD Video 14.01.21.

Canadian Dollar Gains Ground Against U.S. Dollar

USD/CAD managed to get below the support at 1.2665 and is moving towards the next support level at 1.2625 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle above the resistance at 90.50 but failed to develop sufficient upside momentum and declined closer to the nearest support level at the 20 EMA at 90.20. If the U.S. Dollar Index settles below the 20 EMA, it will move towards the 90 level which will be bearish for USD/CAD.

Today, the U.S. reported that Initial Jobless Claims increased to 965,000 while Continuing Jobless Claims grew to 5.27 million. The reports highlighted the need for another round of stimulus. Recent reports suggested that Joe Biden will soon present a stimulus plan worth $1.5 billion – $2 billion.

It remains to be seen whether the new stimulus plan will put additional pressure on the U.S. dollar as money-printing may push U.S. government bond yields higher, providing some support to the American currency on the foreign exchange market.

Technical Analysis

usd cad january 14 2021

USD to CAD gained strong downside momentum and is trying to get to the test of the support level which is located near January lows at 1.2625. RSI is still in the moderate territory so there is plenty of room to gain additional momentum in case the right catalysts emerge.

In case USD to CAD manages to settle below the support at 1.2625, it will move towards the next support level at 1.2590. A successful test of the support at 1.2590 will open the way to the test of the support at 1.2550. I’d note that USD to CAD has not visited this territory for several years so it remains to be seen whether previous levels will be relevant for today’s trading.

On the upside, the previous support at 1.2665 will likely serve as the first resistance level for USD to CAD. If USD to CAD gets back above this level, it will head towards the next resistance at 1.2700.

A move above 1.2700 will push USD to CAD towards the resistance at 1.2720. In case USD to CAD settles above 1.2720, it will head towards the 20 EMA at 1.2740.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data Puts the EUR and USD in Focus, with Italian Politics and COVID-19 to Test the EUR

Earlier in the Day:

It’s was a relatively busy start to the day on the economic calendar this morning. The Japanese Yen and the Aussie Dollar were in action. Economic data from the UK and from China were also in focus in the early part of the day.

For the Japanese Yen

In November, core machinery orders increased by 1.5%, following a 17.1% jump in October. Economists had forecast a 6.2% slide. Year-on-year, core machinery orders were down by 11.3%, following a 2.8% increase in October. Economists had forecast a 15.4% tumble.

The Japanese Yen moved from ¥103.814 to ¥103.812 against the U.S Dollar upon release of the numbers. At the time of writing, the Japanese Yen was down by 0.18% to ¥104.08 against the U.S Dollar

For the Aussie Dollar

Building permits increased by 2.6% in November, following a 3.3% rise in October.

According to the ABS, private sector houses rose 6.1%, while private sector dwellings excluding houses fell 3.9%.

The Aussie Dollar moved from $0.77485 to $0.77466 upon release of the stats that preceded trade data from China. At the time of writing, the Aussie Dollar was up by 0.09% to $0.7740.

From the UK

The RICS House Price Balance slipped from 66% to 65% in December. Economists had forecast a decline to 62%.

The Pound moved from $1.36460 to $1.36464 upon release of the figures.

From China

In December, China’s trade surplus widened from $75.4bn to $78.17bn. Economists had forecast a narrowing to $72.35bn.

  • Exports rose by 18.1%, year-on-year, following a 21% jump in November. Economists had forecast a 15% rise.
  • Imports increased by a more modest 6.5%, following a 4.5% rise in November. Economists had forecast a 5% increase.

The Aussie Dollar moved from $0.77401 to $0.77416 upon release of the trade data.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.07% to $0.7183.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. German GDP numbers for the year are due out today. With ECB President Lagarde standing by the ECB economic projections, today’s figures will give some idea of what to expect for the Euro bloc.

The ECB monetary policy meeting minutes will also garner some attention this afternoon.

Away from the economic calendar, expect COVID-19 news updates and Italian politics to also influence.

To support the optimistic economic outlook, EU member states will need to ramp up vaccination rates near-term.

From Italy, uncertainty over the government coalition will be another test.

At the time of writing, the EUR was down by 0.06% to $1.2150.

For the Pound

It’s another particularly quiet day ahead on the economic calendar. There are no material stats to provide the Pound with direction.

A lack of stats will continue to leave the Pound in the hands of COVID-19 news.

At the time of writing, the Pound was down by 0.03% to $1.3635.

Across the Pond

It’s a relatively quiet day ahead on the economic calendar. The weekly jobless claims figures are due out later today.

Expect plenty of interest in the first set of numbers of the year. Influence on market risk appetite will depend upon stimulus updates from Capitol Hill.

Away from the economic calendar, expect news from Capitol Hill and COVID-19 news to remain the key driver near-term.

At the time of writing, the Dollar Spot Index was up by 0.11% to 90.451.

For the Loonie

It’s a quiet day on the economic data front, with no material stats due out to provide the markets with direction.

The lack of stats will leave the Loonie in the hands of market risk sentiment on the day.

A sizeable stimulus package would support further upside for crude oil prices and the Loonie near-term.

At the time of writing, the Loonie was up by 0.02% to C$1.2696 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – U.S. Dollar Failed To Move Higher

USD/CAD Video 13.01.21.

Canadian Dollar Is Mostly Flat Against U.S. Dollar

USD/CAD  is currently testing the nearest support level at 1.2720 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index managed to get back above the 20 EMA at 90.20 and is trying to develop additional upside momentum. The next resistance level for the U.S. Dollar Index is located at 90.50. If the U.S. Dollar Index gets to the test of this level, USD/CAD may get additional support.

Today, U.S. reported inflation numbers that were mostly in line with analyst estimates. Inflation Rate increased by 1.4% year-over-year in December while Core Inflation Rate grew by 1.6%.

Currently, Democrats are trying to impeach the U.S. President Donald Trump for the second time, but it should be noted that the foreign exchange market has mostly ignored the recent developments on the U.S. political front.

Oil is swinging between gains and losses today so the Canadian dollar is left without additional support. At the same time, USD/CAD remains mostly flat despite the dollar’s strength against a broad basket of currencies.

Technical Analysis

usd cad january 13 2021

USD to CAD is currently trying to settle below the nearest support level at 1.2720. If this attempt is successful, USD to CAD will get to the test of the next support at 1.2700. RSI is in the moderate territory so there is plenty of room to gain downside momentum in case the right catalysts emerge.

In case USD to CAD manages to get below the support at 1.2700, it will move towards the next support level at 1.2665. A successful test of this level will push USD to CAD towards the support which is located near January lows at 1.2625.

On the upside, the nearest material resistance level for USD to CAD is located near the 20 EMA at 1.2750. If USD to CAD settles above this level, it will head towards the next resistance at 1.2775. A move above this level will open the way to the test of the resistance at 1.2800.

For a look at all of today’s economic events, check out our economic calendar.

The Greenback Sees Further Red Early on Ahead of Inflation Figures Later Today

Earlier in the Day

It’s was a particularly quiet start to the day on the economic calendar this morning. There were no material stats to provide the majors with direction in the early hours.

A lack of stats left the Greenback on the back foot, following Tuesday’s pullback.

For the Majors

At the time of writing, the Japanese Yen was up by 0.19% to ¥103.56 against the U.S Dollar, with the Aussie Dollar up by 0.05% to $0.7776. The Kiwi Dollar was up by 0.21% to $0.7235.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. November industrial production figures for the Eurozone are due out later today.

Barring particularly dire numbers, however, the stats are unlikely to have an impact on the EUR.

With the 4th quarter written off, the markets remain optimistic for the year ahead as governments continue to rollout vaccinations. For the EUR, a pickup in vaccination rates is going to be needed, however.

On the monetary policy front, ECB President Lagarde is due to speak later. Expect any forward guidance to influence.

At the time of writing, the EUR was up by 0.06% to $1.2214.

For the Pound

It’s another particularly quiet day ahead on the economic calendar. A lack of stats will leave the Pound in the hands of COVID-19 news.

A pickup in vaccination rates this week amidst the ongoing lockdown should support the Pound.

At the time of writing, the Pound was up by 0.12% to $1.3680.

Across the Pond

It’s a relatively quiet day ahead on the economic calendar. Inflation figures for December are due out of the U.S later in the day.

We don’t expect too much influence from the numbers, however, with sentiment towards U.S stimulus remaining the key driver.

At the time of writing, the Dollar Spot Index was down by 0.08% to 90.025.

For the Loonie

It’s a quiet day on the economic data front, with no material stats due out to provide the markets with direction.

The lack of stats will leave the Loonie in the hands of crude oil inventory numbers.

At the time of writing, the Loonie was up by 0.02% to C$1.2708 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – Canadian Dollar Rebounds After Sell-Off

USD/CAD Video 12.01.21.

U.S. Dollar Is Moving Lower Against Canadian Dollar

USD/CAD is testing the support at 1.2750 while the U.S. dollar is losing some ground against a broad basket of currencies.

The U.S. Dollar Index failed to settle above the resistance at 90.50 and is currently trying to settle below 90.40. If the U.S. Dollar Index manages to get below 90.40, it will head towards the 20 EMA at 90.25 which will be bearish for USD/CAD.

There are no important economic reports scheduled to be released in the U.S. and Canada today so foreign exchange market traders will focus on general market sentiment.

U.S. Treasury yields continue to move higher, and the yield of the 10-year Treasuries has reached 1.18% compared to just 0.92% at the beginning of the year.

Rising yields have provided material support to the American currency but it remains to be seen whether further upside will push U.S. dollar to higher levels.

Meanwhile, the continuation of the rally in the oil market provides support to commodity-related currencies, including Canadian dollar. If WTI oil moves towards the $55 level, Canadian dollar may get a boost.

Technical Analysis

usd cad january 12 2021

USD to CAD is currently trying to settle below the nearest support level at 1.2750. If this test is successful, USD to CAD will move towards the next support level at 1.2720.

If USD to CAD declines below the support at 1.2720, it will get to the test of the support at 1.2700. A move below this level will open the way to the test of the support at 1.2665.

On the upside, USD to CAD needs to get back above the 20 EMA at 1.2760 to have a chance to develop upside momentum in the near term. In case USD to CAD manages to settle above the 20 EMA at 1.2760, it will get to the test of the resistance level at 1.2775.

If USD to CAD settles above the resistance at 1.2775, it will move towards the next resistance level which is located at 1.2800.

For a look at all of today’s economic events, check out our economic calendar.

Another Quiet Day on the Economic Calendar Leaves COVID-19 and Capitol Hill in Focus

Earlier in the Day:

It’s was another relatively quiet start to the day on the economic calendar this morning. The Japanese Yen was in action in the early part of the day, with economic data from UK also in focus.

For the Japanese Yen

The current account surplus narrowed from ¥2.145tn to ¥1.878tn in November. Economists had forecast a narrowing to ¥1.551tn.

The Japanese Yen moved from ¥104.162 to ¥104.144 upon release of the figures. At the time of writing, the Japanese Yen was flat at ¥104.26 against the U.S Dollar.

From the UK

In December, the BRC Retail Sales Monitor increased by 4.8%, following a 7.7% jump in November, year-on-year.

The Pound moved from $1.35245 to $1.35174 upon release of the figures. Lockdown measures overshadowed the further rise in retail sales.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.01% to $0.7696, with the Kiwi Dollar down by 0.03% to $0.7161.

The Day Ahead:

For the EUR

It’s another quiet day ahead on the economic calendar. There are no material stats to provide the EUR with direction.

The lack of stats will leave COVID-19 news in focus.

At the time of writing, the EUR was down by 0.07% to $1.2143.

For the Pound

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out later today to provide the Pound with direction.

On the monetary policy front, BoE MPC Member Broadbent is scheduled to speak., however Expect any forward guidance to influence.

Away from the economic calendar, the focus will be on COVID-19 rate of infections and progress towards the vaccination of priority groups.

At the time of writing, the Pound was down by 0.03% to $1.3514.

Across the Pond

It’s a quiet day ahead on the economic calendar. JOLTs job openings for November are due out later today.

While we expect some influence from the numbers, stimulus hopes will likely mute the effect of any disappointing numbers.

Away from the economic calendar. Any stimulus news would be the key driver.

At the time of writing, the Dollar Spot Index was up by 0.14% to 90.589.

For the Loonie

It’s a quiet day on the economic data front, with no material stats due out to provide the markets with direction.

The lack of stats will leave the Loonie in the hands of market risk sentiment on the day.

At the time of writing, the Loonie was down by 0.02% to C$1.2787 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – Canadian Dollar Is Under Pressure At The Start Of The Week

USD/CAD Video 11.01.21.

U.S. Dollar Moves Higher Against Canadian Dollar

USD/CAD gained strong upside momentum and is trying to settle above the resistance at 1.2800 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index managed to get above the resistance at 90.50 and made an attempt to settle above the next resistance level at 90.70. If the U.S. Dollar Index gets above the resistance at 90.70, it will gain additional upside momentum and head towards the next resistance level at the 50 EMA near the 91 level which will be bullish for USD/CAD.

There are no important economic reports scheduled to be released today in the U.S. and Canada so foreign exchange market traders will focus on general market sentiment.

The U.S. Treasury yields continue to increase, providing additional support to the U.S. dollar. Meanwhile, oil and other commodities are under pressure amid rising coronavirus cases in China which is bearish for commodity-related currencies including Canadian dollar. The combination of rising Treasury yields and a pullback in the commodity space has provided material support to USD/CAD during today’s trading session.

Technical Analysis

usd cad january 11 2021

USD to CAD gained strong upside momentum and tested the resistance at 1.2835 before pulling back below 1.2800. In case USD to CAD manages to settle above 1.2800, it will get to another test of the resistance at 1.2835.

RSI remains in the moderate territory, and there is plenty of room to gain additional momentum in case the right catalysts emerge. If USD to CAD gets above the resistance at 1.2835, it will move towards the next resistance level which is located at the 50 EMA at 1.2860.

On the support side, USD to CAD will likely get material support between the 20 EMA at 1.2765 and the previous resistance level at 1.2775. If USD to CAD manages to settle below the 20 EMA, it will get to the test of the next support level at 1.2750. A successful test of the support at 1.2750 will push USD to CAD towards the support level at 1.2720.

For a look at all of today’s economic events, check out our economic calendar.

A Lack of Economic Data Leaves Capitol Hill and the Greenback in Focus

Earlier in the Day:

It’s was a relatively quiet start to the day on the economic calendar this morning. The Aussie Dollar was in action in the early part of the day, with economic data from China also in focus.

For the Aussie Dollar

Retail sales jumped by 7.1% in November versus a forecasted and prelim 7.0%, according to finalized figures. In October retail sales had risen by 1.6%.

According to the ABS,

  • A first full month of trading in Melbourne, following the lockdown, drove the jump in retail sales. Sales in the state of Victoria surged by 22.4%.
  • Excluding Victoria, retail sales rose by a more modest 2.6%.
  • Household goods retailing and other retailing rose by 12.7% and by 7.9%, with cafes, restaurants, and takeaway food services rising by 6.7%.
  • Clothing, footwear, and personal accessory retailing soared by 26.7%, with department stores retailing jumping by 21.1%.
  • Compared with November 2019, retail sales were up by 13.3%.

The Aussie Dollar moved from $0.7722 to $ 0.77180 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.80% to $0.7695.

Out of China

Inflation figures were in focus this morning.

In December, consumer prices rose by 0.7%, partially reversing a 0.6% slide from November. As a result of the pickup, inflationary pressures returned in December. Year-on-year, consumer prices were up by 0.2%, partially reversing a 0.5% decline from November.

Wholesale deflationary pressures eased at the end of the year. The Producer Price Index fell by 0.4%, following a 1.5% slide in November.

The Aussie Dollar moved from $0.77143 to $0.77100 upon release of the figures.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.24% to ¥104.19 against the U.S Dollar, with the Kiwi Dollar down by 0.83% to $0.7182.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. There are no material stats to provide the EUR with direction.

The lack of stats will leave COVID-19 news in focus.

On the monetary policy front, ECB President Lagarde is scheduled to speak late in the session. Expect any monetary policy talk to provide direction.

At the time of writing, the EUR was down by 0.37% to $1.2173.

For the Pound

It’s a particularly quiet day ahead on the economic calendar. A lack of stats leaves the Pound in the hands of COVID-19 news.

Progress on vaccinations and the number of new cases will be the main areas of focus.

At the time of writing, the Pound was down by 0.47% to $1.3504.

Across the Pond

It’s a quiet day ahead on the economic calendar. There are no material stats due out of the U.S to provide the markets with direction.

The lack of stats will leave the markets to focus on Capitol Hill.

There’s the talk of a Trump impeachment and the markets will also be looking for further details of Biden’s stimulus plans.

At the time of writing, the Dollar Spot Index was up by 0.34% to 90.401.

For the Loonie

It’s a quiet day on the economic data front, with no material stats due out to provide the markets with direction.

The lack of stats will leave the Loonie in the hands of market risk sentiment on the day.

From the Bank of Canada, the BoC Business Outlook Survey will draw interest later in the day, however.

At the time of writing, the Loonie was down by 0.39% to C$1.751 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.