A Quiet Economic Calendar Leaves U.S Politics, COVID-19, and Brexit in Focus

Earlier in the Day:

It’s was a relatively quiet start to the day on the economic calendar this morning. The Kiwi Dollar and Aussie Dollar were in action early on, with the PBoC also in the spotlight.

Away from the economic calendar, the markets also responded to the lack of progress on Capitol Hill.

For the Kiwi Dollar

In the 3rd quarter, the NZIER Business Confidence

According to the NZIER Quarterly Survey of Business Opinion,

  • A net 40% of firms expect business conditions to deteriorate in the 3rd quarter, compared with 63% in the previous quarter.
  • The building sector was the most confident, with a net 7% of firms expecting an improvement in the economy near-term.
  • Other sectors were more cautious. While manufacturers were less pessimistic, the service sector was the most pessimistic. A net 49% of services firms expect a worsening in general economic conditions in the coming months.
  • Uncertainty continues to plague the services sector after the adverse effects of lockdown and border restrictions.

The Kiwi Dollar moved from $0.66047 to $0.66027 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.30% to $0.6586.

For the Aussie Dollar

The RBA monetary policy meeting minutes drew interest early this morning.

Salient points from the minutes included:

  • Members observed that the global economy was recovering but that most economies were still some way off pre-pandemic output levels.
  • The continuation of the recovery was dependent upon the containment of the virus.
  • China’s economic recovery was the most advanced, while globally, inflation remained very low and below central bank targets.

Domestically,

  • While Australia saw its largest economic contraction since the 1930s, members noted that the decline in output had been smaller than expected.
  • Labour market conditions had improved, with the unemployment rate likely to peak at a lower rate than previously expected.
  • The RBA expects both unemployment and underemployment to remain high for an extended period of time.
  • Members considered that the economy would need fiscal and monetary support for some time.
  • Members also noted that the effects of monetary policy easing had been impaired as a result of restrictions on activity in parts of the economy.
  • As the economy opens up, however, members considered it reasonable to expect further monetary policy easing to gain more traction.
  • The Board also considered the nature of the forward guidance regarding the cash rate. Given the higher level of uncertainty about inflation dynamics, the Board agreed to place more weight on actual, not forecast, inflation for its decision-making.
  • Members also indicated that they would like to see more than just progress towards full employment before considering an increase in the cash rate.

The Aussie Dollar moved from $0.70559 to $0.70582 upon release of the minutes. At the time of writing, the Aussie Dollar was down by 0.44% to $0.7043.

Out of China

The markets are expecting that the PBoC will leave Loan Prime Rates unchanged this morning. Currently, the 1-year LPR sits at 3.85%, with the 5-year at 4.65%.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.10% ¥105.54 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. Wholesale inflation figures for September are due out of Germany.

We don’t expect too much influence on the EUR, however, with COVID-19 numbers and any Brexit chatter in focus.

At the time of writing, the EUR was up by 0.02% to $1.1771.

For the Pound

It’s a particularly 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 any further chatter on Brexit and updates on COVID-19 in focus.

While Downing Street announced an end to negotiations, the markets are expecting talks to resume. Boris Johnson left the door open for further talks, though it remains to be seen whether the EU will compromise…

At the time of writing, the Pound was flat at $1.2948.

Across the Pond

It’s a relatively quiet day ahead for the U.S Dollar.

September building permits and housing starts are due out later this afternoon.

Barring particularly dire numbers, we would expect the markets to brush aside the numbers.

The focus will be on the U.S Presidential Election polls, the Senate polls, and chatter from Capitol Hill.

Expect updates on COVID-19 to also influence on the day.

At the time of writing, the Dollar Spot Index was down by 0.02% to 93.404.

For the Loonie

It’s a particularly quiet day ahead. There are no key stats due out of Canada to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of COVID-19 and U.S politics on the day. A continued rise in new COVID-19 cases will continue to test support for the Loonie.

At the time of writing, the Loonie was up by 0.02% to C$1.3190 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 At The Start Of The Week

USD/CAD Video 19.10.20.

Canadian Dollar Gains Ground On Strong Oil And U.S. Stimulus Hopes

USD/CAD is under pressure as the U.S. dollar is losing ground against a broad basket of currencies while WTI oil is trying to settle above the $41 level despite worries about the second wave of coronavirus in Europe.

The U.S. Dollar Index has managed to settle below 93.50 and tries to gain additional downside momentum on hopes for a new coronavirus aid package in the U.S.

According to recent reports, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin will resume negotiations today. Nancy Pelosi has previously set a deadline of October 20 for a vote in case Republicans and Democrats want to pass the new aid bill before the election.

Today, Canada reported that Wholesale Sales increased by 0.3% month-over-month in August. The report was fully in line with the analyst consensus.

This week, USD/CAD traders will have a chance to evaluate the latest inflation data from Canada which will be published on Wednesday. Inflation Rate is expected to grow by 0.4% year-over-year in September while Core Inflation Rate is projected to increase by 0.7%.

On Thursday, the Bank of Canada will announce its Interest Rate Decision and present its Monetary Policy Report. The rate is expected to stay unchanged at 0.25% so traders will focus on the Bank’s commentary about its plans to support the economy.

Technical Analysis

usd cad october 19 2020

USD to CAD managed to settle below the support at 1.3200 and developed material downside momentum. The nearest support level for USD to CAD is located at 1.3135.

In case USD to CAD moves below this level, it will head towards the next support level at October lows at 1.3100. A move below 1.3100 will open the way to the test of the support at 1.3050.

On the upside, the previous support at 1.3200 will likely serve as the first resistance level for USD to CAD. The 20 EMA is located in the nearby so this resistance level is set to be strong.

If USD to CAD settles above the resistance at 1.3200, it will gain upside momentum and move towards the next resistance at the 50 EMA at 1.3240.

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

Riskier Assets Find Support, with China Stats, COVID-19, and U.S Politics in Focus

Earlier in the Day:

It’s was a particularly busy start to the day on the economic calendar this morning. The Japanese Yen was in action early on, with economic data from China also in focus. Away from the economic calendar, U.S politics and COVID-19 were also in focus.

Positive chatter from Capitol Hill and hopes of a COVID-19 vaccine supported riskier assets early on.

Nancy Pelosi raised hope of a pre-Election Stimulus Bill over the weekend, while also setting a deadline for talks.

At the end of last week, U.S Pharma Phizer talked of having a COVID-19 vaccine ready before the end of the year.

For the Japanese Yen

Japan’s trade surplus widened from ¥248.6bn to ¥675.0bn in September. Economists had forecast a widening to ¥989.8bn.

According to figures released by the  Ministry of Finance,

  • Exports fell by 4.9% when compared with September 2019.
    • Exports to China jumped by 14.0%, while down by 2.0% to Asia.
    • Exports to the U.S rose by just 0.7%, while exports to Western Europe fell by 6.4%.
  • Imports tumbled by 17.2% when compared with September 2019.
    • Imports from China slid by 11.9% while falling by 12.6% from Asia.
    • From the U.S, imports fell by 9.9%, with imports from Western Europe sliding by 14.4%.

The Japanese Yen moved from ¥105.426 to ¥105.443 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.01% ¥105.41 against the U.S Dollar.

Out of China

3rd quarter GDP, fixed asset investment, industrial production, retail sales, and unemployment figures were in focus this morning.

In the 3rd quarter, China’s economy grew by 2.7%, quarter-on-quarter, following 11.5% growth in the 2nd quarter. Year-on-year, the economy expanded by 4.9%, following 3.2% growth in the 2nd quarter. Economists had forecasted growth of 3.2% and 5.2% respectively.

Industrial production increased by 6.9%, year-on-year, in September, following a 5.6% rise in August. Economists had forecast a 5.8% increase.

Retail sales increased by 3.3%, following a 0.5% increase in August. Economists had forecast a 1.8% rise.

The unemployment rate declined from 5.6% to 5.4% in September, which was better than a forecasted decline to 5.5%.

The Aussie Dollar moved from $0.71031 to $0.70961 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.27% to $0.7100.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.30% to $0.6622.

The Day Ahead:

For the EUR

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

A lack of stats leaves the EUR in the hands of COVID-19 and any further chatter on Brexit.

With lockdown measures being introduced in Europe, any further steps to contain the virus will test EUR support.

At the time of writing, the EUR was down by 0.05% to $1.1712.

For the Pound

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

A lack of stats will leave the markets to react to any Brexit chatter and COVID-19 news.

Further COVID-19 restrictions are expected on Monday, which would be Pound negative.

At the time of writing, the Pound was up by 0.10% to $1.2928.

Across the Pond

It’s a quiet day ahead for the U.S Dollar.

With no material stats due out of the U.S, the focus will be on Capitol Hill and the U.S elections.

The markets are looking for a clean sweep, which will bring the Senate elections into focus. As Biden leads Trump in the Presidential Election polls, the Democrats will need to stay ahead in the senate polls to support riskier assets.

On Capitol Hill, any hint of progress towards a COVID-19 stimulus Bill would also support riskier assets on the day.

At the time of writing, the Dollar Spot Index was up by 0.02% to 93.697.

For the Loonie

It’s a relatively quiet day ahead. Key stats due out of Canada include August wholesale sales figures.

We don’t expect too much influence on the Loonie, however. COVID-19 news updates and market sentiment towards the economic outlook and demand for crude will remain the key drivers.

At the time of writing, the Loonie was up by 0.09% to C$1.3177 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, COVID-19, Brexit, and Private Sector PMIs in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 57 stats in focus in the week ending 23rd October. In the week prior, 56 stats had been in focus.

For the Dollar:

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

On Tuesday, Wednesday, and Thursday, housing sector figures for September are in focus.

With mortgage rates hovering close to historic lows, the numbers are unlikely to have a material impact on the Dollar.

On Thursday, however, U.S jobless claims figures will influence ahead of private sector PMIs on Friday.

October’s prelim services, manufacturing, and composite PMIs are due out at the end of the week.

Expect the Services PMI to be the key driver. The markets will be looking for a pickup in service sector activity…

Away from the economic calendar, we are just over 2-weeks away from the U.S Presidential Election. Wednesday’s final live televised Presidential debate will garner plenty of attention as will chatter from Capitol Hill. We can also expect increased interest in the Senate Election polls.

The Dollar Spot Index ended the week up by 0.67% to 93.682.

For the EUR:

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

On Tuesday, German wholesale inflation figures are due out ahead of a busier 2nd half of the week.

On Thursday, Germany is back in focus, with November consumer climate figures due out.

Prelim October private sector PMIs from France, Germany, and the Eurozone will be the key drivers on Friday, however.

We can expect plenty of sensitivity to the numbers. A new spike in new COVID-19 cases in France and other parts of the EU may have impacted activity at the start of the quarter.

Away from the economic calendar, Brexit and COVID-19 will need monitoring throughout the week.

The EUR/USD ended the week down by 0.91% to $1.1718.

For the Pound:

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

The markets will have to wait until Wednesday, however, for the first set of numbers.

Inflation figures for September are due out ahead of CBI industrial trend orders on Thursday.

We would expect the Pound to be sensitive to the inflation figures ahead of a busy end to the week.

On Friday, retail sales figures for September and prelim October private sector PMIs will provide direction.

With the BoE open to negative rates, dire numbers will test support for the Pound.

Of greater influence in the week, however, will be Brexit and COVID-19 news.

The GBP/USD ended the week down by 0.93% to $1.2915.

For the Loonie:

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

At the start of the week, wholesale sales figures for August are in focus on Monday.

We don’t expect too much influence from the numbers, however.

On Wednesday, September inflation and August retail sales figures will provide direction.

From elsewhere, expect GDP numbers from China and prelim private sector PMIs from the Eurozone and the U.S to also influence.

Away from the economic calendar, risk appetite will likely be dictated by COVID-19 and the U.S Presidential Election polls. There’s also the final presidential debate to consider on Wednesday.

The Loonie ended the week down by 0.52% to C$1.3189 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

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

There are no material stats due out of Australia to provide the Aussie with direction.

The lack of stats will leave the Aussie Dollar firmly in the hands of market risk sentiment in the week.

Expect China’s GDP numbers and prelim PMIs from the Eurozone and the U.S to influence

On the monetary policy front, the RBA meeting minutes at the start of the week will garner interest. There has been the talk of an RBA move next month, the minutes could reveal what is on the cards…

The Aussie Dollar ended the week down by 2.20% to $0.7081.

For the Kiwi Dollar:

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

In the 1st half of the week, 3rd quarter business confidence figures are due out. A pickup in confidence would provide support to the Kiwi ahead of a busy Friday.

Trade data for May and 3rd quarter inflation figures will influence at the end of the week.

While the stats will provide direction, however, economic data from China and COVID-19 will likely be the key drivers.

The Kiwi Dollar ended the week down by 0.96% to $0.6602.

For the Japanese Yen:

It is a relatively quiet week on the economic calendar.

Trade data for September will draw interest at the start of the week ahead of inflation at the end of the week.

We don’t expect the numbers to have too much influence on the Yen, however.

The key driver for the Japanese Yen, however, will be COVID-19 news and U.S politics.

The Japanese Yen ended the week up by 0.21% to ¥105.40 against the U.S Dollar.

Out of China

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

3rd quarter GDP numbers due out on Monday will be the key driver for the Yuan and market risk sentiment.

September’s industrial production, retail sales, and unemployment figures will also influence.

Barring particularly dire numbers, the fixed asset investment numbers should have a muted impact.

On the monetary policy front, the PBoC is in action on Tuesday. The markets are expecting the PBoC to leave loan prime rates unchanged. Any unexpected rate cut could spook the markets…

The Chinese Yuan ended the week down by 0.04% to CNY6.6976 against the U.S Dollar.

Geo-Politics

UK Politics:

On Friday, Boris Johnson announced that Brexit negotiations were over. Downing Street added the EU chief negotiator Barnier does not need to return to London in the week ahead.

Following the EU’s attempts to leave the ball in Britain’s court, with Fisheries a key issue, it now rests with the EU to compromise. Johnson has been clear that it would not leave fishing access unchanged, despite Macron’s attempts to strong-arm Britain into yielding.

For French fishermen, it would ultimately mean no access to UK fisheries should Britain leave without a deal…

Also at the start of the week, the British Prime Minister is due to announce more containment measures. With the number of new COVID-19 cases continuing to rise, further restrictions would be Pound negative.

U.S Politics

After last week’s individual town hall sessions, the final live televised debate will take place on Wednesday.

It will be a chance for Trump to narrow the gap ahead of the 3rd November Election.

If past performance is any indicator of future performance, however, it could just give Biden a greater edge.

As the markets begin to write-off a Trump victory, the focus will likely shift to the Senate Elections.

A blue wave is expected that would support further stimulus in the New Year.

The Weekly Wrap – Brexit, COVID-19, and U.S Politics Drive the Majors

The Stats

It was a busier week on the economic calendar, in the week ending 16th October.

A total of 56 stats were monitored, following 43 stats from the week prior.

Of the 56 stats, 24 came in ahead of forecasts, with 21 economic indicators came up short of forecasts. 11 stats were in line with forecasts in the week.

Looking at the numbers, 20 of the stats also reflected an upward trend from previous figures. Of the remaining 36 stats, 27 reflected a deterioration from previous.

For the Greenback, it was back into the green after 2 consecutive weeks in the red. The Dollar Spot Index rose by 0.67% to 93.682. In the week ending 9th October, the Dollar Spot Index had fallen by 0.87% to 93.057.

Market risk appetite waned in the week. There were a number of factors driving demand for the Dollar. A lack of progress towards a U.S stimulus bill and a spike in COVID-19 cases were front and center in the week.

Disappointing economic data and Brexit woes also supported the demand for the safety of the Dollar.

Out of the U.S

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

Inflation figures drew interest early in the week. In the 2nd half of the week, however, jobless claims and retail sales figures were the key drivers. Prelim October consumer sentiment figures were also in focus late on Friday.

In the week ending 9th October, initial jobless claims stood at 898k, which was up from 845k from the week prior. The numbers reinforced the view that the labor market recovery had stalled.

A combination of dire labor market conditions, rising new COVID-19 cases, and a lack of further stimulus was a bad combination.

At the end of the week, retail sales impressed, however. In September, retail sales rose by 1.9%, with core retail sales rising by 1.5%. Economists had forecasted increases of 0.5% and 0.7% respectively.

Aligned with the retail sales figures was a further pickup in consumer sentiment. The Michigan Consumer Sentiment Index rose from 80.4 to 81.2 in October, according to prelim figures. The Expectations Index increased from 75.6 to 78.8.

The only negative on the day was an unexpected 0.6% fall in industrial production.

In the equity markets, the NASDAQ rose by 0.79%, with the Dow and S&P500 gaining 0.07% and 0.19% respectively.

Out of the UK

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

Key stats included August unemployment rate and employment change and September claimant count figures.

While claimant counts came in lower than expected, employment fell by more than expected over the 3-months to August.

A 153k fall in employment led to an increase in the unemployment rate from 4.1% to 4.5%.

While the stats provided direction, it was ultimately Brexit and COVID-19 that sank the Pound in the week.

A continued rise in new COVID-19 cases and a new round of containment measures were Pound negative.

More significantly, however, was a lack of progress towards a Brexit agreement, with the EU pushing for more talks next week.

On Friday, Boris Johnson announced that it was time to prepare for a no-trade deal Brexit unless the EU changed its stance. Downing Street also stated that there was no point in EU negotiator Michel Barnier returning to London in the week ahead.

In the week, the Pound fell by 0.93% to $1.2915. In the week prior, the Pound had risen by 0.78% to $1.3036.

The FTSE100 ended the week down by 1.61%, partially reversing a 1.94% gain from the previous week.

Out of the Eurozone

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

Early in the week, key stats included ZEW Economic Sentiment figures for the Eurozone and Germany.

The indicators flashed red for October. Germany’s Economic Sentiment Indicator fell from 77.4 to 56.1, with the Eurozone’s falling from 73.9 to 52.3. A lack of progress on Brexit and jitters over the U.S Presidential Election weighed in October.

Mid-week, industrial production figures for the Eurozone came up short of expectations, rising by just 0.7%. In July, production had jumped by 5.0%.

In the 2nd half of the week, Eurozone trade data and finalized inflation figures for September were in focus.

Inflation figures reaffirmed market concern over deflationary pressures. Trade data also failed to impress, with the Eurozone’s trade surplus narrowing from €27.9bn to €14.7bn in August.

While the stats provided direction, a marked increase in new COVID-19 cases weighed on the EUR in the week. France and other member states were forced to reintroduce containment measures amidst the 2nd wave.

For the week, the EUR fell by 0.91% to $1.1718. In the week prior, the EUR had risen by 0.94% to $1.1826.

For the European major indexes, it was a bearish week. The CAC40 and EuroStoxx600 fell by 0.22% and by 0.77% respectively, with the DAX30 declining by 1.09%.

For the Loonie

It was a quiet week on the economic data front.

Key stats included August’s foreign security purchases and manufacturing sales figures.

Neither set of numbers had an impact, however, as the fresh spike in new COVID-19 cases weighed on market risk sentiment.

The threat of a reintroduction of lockdown measures pegged back crude oil prices in the week.

In the week ending 16th October, the Loonie fell by 0.52% to end the week at C$1.3189. In the week prior, the Loonie had risen by 0.87%.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 16th October, the Aussie Dollar slid by 2.20% to $0.7081. The Kiwi Dollar ended the week down by a more modest 0.96% to $0.6602.

For the Aussie Dollar

It was a relatively quiet week on the economic calendar.

Key stats consumer confidence and employment figures.

It was a mixed bag for the Aussie Dollar. While consumer confidence continued to improve, employment figures were somewhat disappointing.

The unemployment rate rose from 6.8% to 6.9%, driven by a 29.5k fall in employment.

For the Aussie Dollar, it was ultimately market sentiment towards monetary policy and risk aversion that did the damage. There is the talk of an RBA next month…

For the Kiwi Dollar

It was a relatively quiet week on the economic calendar.

Key stats included electronic card retail sales figures and business PMI numbers.

The stats were Kiwi Dollar positive, with retail sales up by 5.4% and the PMI rising from 50.7 to 54.0.

While positive, however, market risk aversion pegged the Kiwi Dollar back in the week.

For the Japanese Yen

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

August’s core machinery orders and finalized industrial production figures were in focus.

The stats were skewed to the negative in the week. Core machinery orders rose by just 0.2%, following a 6.3% jump in July. Industrial production was revised down from 1.7% to 1.0%.

Ultimately, however, it was market risk sentiment that delivered the support for the Yen.

The Japanese Yen rose by 0.21% to ¥105.4 against the U.S Dollar. In the week prior, the Yen had fallen by 0.31%.

Out of China

It was a relatively busy week on the economic data front following last week’s holiday.

Key stats included September’s trade data and inflation figures, which were skewed to the negative.

China’s U.S Dollar trade surplus narrowed from $58.93bn to $37.00bn, driven by a 13.2% jump in imports. Exports rose by a more modest 9.9%.

Inflationary pressures also softened at the end of the quarter. China’s annual rate of inflation softened from 2.4% to 1.7% in September. Wholesale deflationary pressures picked up marginally. The producer price index fell by 2.1%, following a 2.0% decline in August.

In the week ending 16th October, the Chinese Yuan slipped by 0.04% to CNY6.6976. In the week prior, the Yuan had risen by 1.42%.

The CSI300 rose by 2.36%, with the Hang Seng gaining 1.11%.

USD/CAD Daily Forecast – U.S. Dollar Pulls Back After Yesterday’s Move

USD/CAD Video 16.10.20.

Canadian Dollar Is Strong Ahead Of The Weekend

USD/CAD is currently trying to settle below 1.3200 as the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to get below the nearest support level at the 20 EMA at 93.55 but did not manage to gain sufficient downside momentum.

If the U.S. Dollar Index moves below the 20 EMA, it will head towards the next support near 93.30 which will be bullish for currencies which are linked to natural resources like the Canadian dollar.

Today, U.S. reported that Retail Sales increased by 1.9% month-over-month in September compared to analyst consensus which called for growth of 0.7%. Meanwhile, the preliminary reading of Michigan Consumer Sentiment indicated that Consumer Sentiment increased from 80.4 in September to 81.2 in October.

Consumer-related reports were surprisingly strong since U.S. Republicans and Democrats failed to reach consensus on the new coronavirus aid package.

U.S. Industrial Production declined by 0.6% month-over-month compared to analyst consensus which called for growth of 0.5%. Manufacturing Production also declined by 0.3%.

Industrial Production and Manufacturing Production reports were disappointing but it remains to be seen whether they highlighted temporary problems or showed a beginning of a new downside trend.

Technical Analysis

usd cad october 16 2020

USD to CAD is testing the support level at 1.3200. If this test is successful, USD to CAD will gain additional downside momentum and head towards the next support level at 1.3135. There are no material levels between 1.3135 and 1.3200 so this move may be fast.

If USD to CAD manages to settle below the support at 1.3135, it will decline towards the next support level at October lows at 1.3100.

On the upside, USD to CAD needs to stay above the support at 1.3200 in order to continue its rebound. The nearest resistance level for USD to CAD is located at the 20 EMA near 1.3220.

A move above the 20 EMA will signal that USD to CAD is ready to develop additional upside momentum. In this case, USD to CAD will head towards the next resistance level at the 50 EMA near 1.3250.

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

Brexit, U.S Stimulus Talks, and Economic Data Put the Pound and the Dollar in Focus

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 on.

Away from the economic calendar, updates on Brexit and U.S stimulus talks were also in focus as the markets responded to disappointing economic data from the U.S.

For the Kiwi Dollar

In September, the Business PMI rose from 50.70 to 54.0. In August, the PMI had fallen from 58.8 to 50.7.

The Kiwi Dollar moved from $0.66015 to $0.65993 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.02% to $0.6599.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.08% ¥105.37 against the U.S Dollar, while the Aussie Dollar was down by 0.08% to $0.7088.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Key stats include finalized September inflation figures for Italy and the Eurozone and August trade figures for the Eurozone.

Barring a marked downward revision to Eurozone inflation figures, however, the stats should have a muted impact on the EUR.

Away from the economic calendar, COVID-19 news and Brexit will remain key drivers on the day.

At the time of writing, the EUR was down by 0.02% to $1.1706.

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.

A lack of stats will leave the markets to react further to the EU Summit. Covid-19 containment measures, announced in the week, will also test Pound support on the day.

Following a disappointing outcome to the EU Summit, where no progress was made, Boris Johnson is due to make a statement today. The deadline has now passed and no framework for an agreement is in place. Will the British PM pull the plug?

At the time of writing, the Pound was down by 0.05% to $1.2902.

Across the Pond

It’s another busy day ahead for the U.S Dollar.

Key stats include September retail sales and industrial production figures along with October consumer sentiment figures.

Expect the retail sales and consumer sentiment figures to be the key drivers on the day.

Away from the economic calendar, U.S politics, and updates from Capitol Hill will also influence on the day.

The Dollar Spot Index rose by 0.51% to 93.856 on Thursday.

For the Loonie

It’s a relatively quiet day ahead. Key stats due out of Canada include August manufacturing sales and foreign securities purchases.

Barring particularly dire numbers, however, we would expect the stats to have limited influence on the Loonie.

Expect updates on new COVID-19 cases and market risk sentiment to be the key drivers on the day.

At the time of writing, the Loonie was down by 0.03% to C$1.3225 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 Resistance At 1.3250

USD/CAD Video 15.10.20.

Canadian Dollar Is Under Significant Pressure Against U.S. Dollar

USD/CAD is currently testing the resistance at the 50 EMA at 1.3250 as the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is also testing the resistance at the 50 EMA at 93.75 amid fears about the second wave of lockdowns in Europe. If the U.S. Dollar Index manages to settle above the 50 EMA, it will gain additional upside momentum and move towards the 94 level which will be bullish for USD/CAD.

Today, the U.S. reported that Initial Jobless Claims increased from 845,000 (revised from 840,000) to 898,000. Continuing Jobless Claims declined from 11.18 million (revised from 10.98 million) to 10.02 million.

The situation in the U.S. job market remains tense, and the economy needs another round of stimulus. U.S. Republicans and Democrats continue their negotiations but it remains to be seen whether they will be able to reach a deal before the November election.

Meanwhile, Canada provided ADP Employment Change report for September. The report indicated that Canada’s private businesses cut 241,000 jobs while analysts expected that only 50,000 jobs would be eliminated. The pace of layoffs has increased compared to the previous month.

In combination with virus fears, disappointing job data boosted demand for safe haven assets and put pressure on the riskier currency of Canada.

Technical Analysis

usd cad october 15 2020

 

USD to CAD gained strong upside momentum and is testing the resistance at the 50 EMA at 1.3250. In case USD to CAD manages to settle above this level, it will head towards the next major resistance level at 1.3330. There are no significant levels between 1.3250 and 1.3330 so this move may be fast.

If USD to CAD is able to get above the resistance at 1.3330, it will gain additional upside momentum and head towards the resistance level at 1.3420.

On the support side, the nearest support for USD to CAD is located at the 20 EMA at 1.3220. If USD to CAD declines below this level, it will head towards the next support level at 1.3200.

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

The EU Summit Puts the Pound in Focus, with COVID-19 back in the Spotlight

Earlier in the Day:

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

For the Aussie Dollar

September employment figures were in focus this morning.

Total employment fell by 29.5k in September, partially reversing a 111k jump from August. Economists had forecast a 35k decline.

Full employment fell by 20.1k, following a 36.2k increase in August. In September, the unemployment rate rose from 6.8% to 6.9%. Economists had forecast an increase to 7.1%.

According to the ABS,

  • The number of unemployed people increased by 11,300 people and was up by 228,100 over the year.
  • Compared to September 2019, full-time employment declined by 301,700, with part-time employment falling by 56,700.
  • The employment to population ratio fell by 0.2 points 60.3%.
  • While the unemployment rate increased, the participation rate fell by 0.1 points to 64.8%.

The Aussie Dollar moved from $0.71375 to $0.71394 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.31% to $0.7140.

Out of China

The annual rate of inflation softened from 2.4% to 1.7% in September. Economists had forecast a softening to 1.8%. Month-on-month, consumer prices increased by 0.2%, following a 0.4% rise in August. Economists had forecast a 0.3% rise.

Wholesale deflationary pressures picked up in September. The producer price index fell by 2.1%, following a 2.0% decline in August, year-on-year. Economists had forecast a 1.8% fall.

The Aussie Dollar moved from $0.71440 to $0.71379 upon release of the figures.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.09% ¥105.26 against the U.S Dollar, with the Kiwi Dollar down by 0.03% to $0.6655.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Key stats include finalized September inflation figures from France.

Barring a material revision from prelim figures, we would expect the stats to have a muted impact on the EUR.

Expect Brexit updates from the EU Summit later in the day to be the key driver on the day.

On the monetary policy front, ECB President Lagarde is due to speak later in the day. Expect any chatter on monetary policy and the economic outlook to influence.

While Brexit will likely be the key driver, market concerns over the latest rise in new COVID-19 cases will also test the EUR.

At the time of writing, the EUR was up by 0.01% to $1.1747.

For the Pound

It’s a quiet day ahead on the economic calendar. There are no material stats due out, leaving the Pound in the hands of Brexit.

Failure to find common ground at the EU Summit later today could see British negotiators walk away. Expect a choppy day ahead…

At the time of writing, the Pound was up by 0.04% to $1.3017.

Across the Pond

It’s a busy day ahead for the U.S Dollar.

Key stats include Philly and NY State manufacturing PMI figures and the weekly jobless claims for the week ending 9th October.

Expect the weekly jobless claims and October’s Philly FED Manufacturing PMI to be the key drivers on the day.

Away from the economic calendar, U.S politics, and updates from Capitol Hill will also influence on the day.

The Dollar Spot Index was up by 0.02% to 93.400 at the time of writing.

For the Loonie

It’s a quiet day ahead, with no material stats to provide the Loonie with direction.

A lack of stats will leave the Loonie in the hands of the EIA crude oil inventory numbers due out later today.

Away from the economic calendar, market risk sentiment and COVID-19 news will also provide direction.

At the time of writing, the Loonie was down by 0.05% to C$1.3153 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 1.3135 Remains A Serious Obstacle On The Way Up

USD/CAD Video 14.10.20.

Canadian Dollar Is Mostly Flat Against U.S. Dollar

USD/CAD continues its attempts to settle above the nearest resistance level at 1.3135 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index has lost upside momentum and declined below the 20 EMA at 93.50. If the U.S. Dollar Index settles below 93.50, it will likely gain downside momentum which will be bearish for USD/CAD.

Meanwhile, WTI oil is trying to settle above the nearest resistance level at $40.70. Interestingly, a combination of weaker U.S. dollar and stronger oil did not manage to put pressure on USD/CAD.

Tomorrow, USD/CAD traders will focus on employment data from U.S. and Canada. U.S. Initial Jobless Claims are expected to decline from 840,000 to 825,000 while Continuing Jobless Claims are projected to fall from 10.98 million to 10.7 million.

In Canada, ADP Employment Change report is expected to show that private businesses cut about 50,000 jobs in September.

Another important topic for USD/CAD traders is the continued uncertainty about the fate of the new U.S. coronavirus aid package. Recent reports indicate that U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin had a good discussion on the aid deal, but it remains to be seen whether Democrats and Republicans will be able to reach consensus before the election in November.

Technical Analysis

usd cad october 14 2020

USD to CAD is currently testing the nearest resistance level at 1.3135. If USD to CAD manages to settle above 1.3135, it will gain additional upside momentum and head towards the major resistance level at 1.3200.

A move above 1.3200 will open the way to the 20 EMA level at 1.3215. A move above the 20 EMA will signal that USD to CAD is gaining strength. In this case, USD to CAD will head towards the next resistance level at the 50 EMA at 1.3250.

On the support side, the nearest support level is still located at the recent lows at 1.3100. If USD to CAD declines below this support level, it will continue its downside move and get to the test of the next support at 1.3050.

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

Brexit and COVID-19 Keep the Pound in the Spotlight, with U.S Politics also 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 early on, with economic data from Japan due out later this morning.

For the Aussie Dollar

Consumer sentiment was in focus early on. The Westpac Consumer Sentiment Index jumped by 11.9% to 105.0 in October. In September, the Index had surged by 18.0% to 93.8.

According to the latest Westpac Report,

  • A 2nd sharp monthly rise took the index to its highest level since July 2018. Confidence now sits 10% above the average level in the 6-months prior to the pandemic.
  • The sharp increase was attributed to the October Federal Budget and continued success in containing the COVID-19 outbreak.
  • Expectations of a further RBA rate cut in November was also considered a possible source of support.

Looking at the sub-indexes:

  • Finances vs a year ago rose by 6.2% to 92.9, with finances next 12-months rising by 9.4% to 110.8.
  • Sentiment towards the economic outlook continued to impress.
    • Economic conditions next 12-months surged by 24.2% to 94.0, taking it above the long-run average of 90.7.
    • Over the next 5-years, sentiment jumped by 14.1% to 113.8. The long-run average sat at 91.3.
  • The time to buy a dwelling sub-index rose by 10.6%, with the Unemployment Expectations Index sliding by 14.2%.
  • Sentiment towards the housing sector also improved, with the House Price Expectations Index surging by 31.5%.

The Aussie Dollar moved from $0.71623 to $0.71644 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.04% to $0.7164.

For the Japanese Yen

Finalized industrial production figures for August are due out later this morning. Barring a marked revision from prelim numbers, however, the data should have a muted impact on the Yen.

At the time of writing, the Japanese Yen was up by 0.13% ¥105.34 against the U.S Dollar.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.11% to $0.6658.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Key stats include August’s industrial production figures for the Eurozone.

Finalized inflation figures for Spain are also due out but will likely have a muted impact on the EUR.

On the monetary policy front, ECB President Lagarde is scheduled to speak. Expect any chatter on monetary policy or the economic outlook to influence.

With Boris Johnson’s 15th October Brexit deadline, however, expect the focus to be on Brexit ahead of tomorrow’s EU Summit.

Adding to the EUR’s near-term woes is the continued rise in new COVID-19 cases.

At the time of writing, the EUR was down by 0.03% to $1.1743.

For the Pound

It’s a quiet day ahead on the economic calendar. There are no material stats due out, leaving the Pound in the hands of Brexit.

Its last chance saloon for the likes of Macron to compromise or face the uncertainty of a no-deal Brexit. Hopes of an EU compromise and an agreement had hit a wall over the weekend following Macron’s latest demands.

With the BoE ready to deliver negative rates and the UK government introducing new COVID-19 containment measures, only a Brexit deal can support a Pound rebound.

At the time of writing, the Pound was down by 0.05% to $1.2931.

Across the Pond

It’s a relatively busy day ahead for the U.S Dollar. September wholesale inflation figures are due out later today.

Barring particularly dire numbers, however, the stats are unlikely to have a material impact on the U.S Dollar.

The market focus will likely remain on geopolitics, Capitol Hill, the U.S Presidential Election, and COVID-19 updates.

The Dollar Spot Index was up by 0.01% to 93.539 at the time of writing.

For the Loonie

It’s a quiet day ahead, with no material stats to provide the Loonie with direction.

While there are no material stats, the IEA’s monthly report should provide crude oil prices along with the weekly inventory numbers.

Expect COVID-19 news to also influence sentiment towards the demand for crude oil and the direction of the Loonie.

At the time of writing, the Loonie was down by 0.08% to C$1.3150 against the U.S Dollar.

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

USD/CAD Daily Forecast – Attempt To Move Above Resistance At 1.3135

USD/CAD Video 13.10.20.

U.S. Dollar Gained Significant Upside Momentum

USD/CAD is trying to settle above the nearest resistance level at 1.3135 as the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index managed to get above the resistance area at 93.20 – 93.25 and gained strong upside momentum. Currently, the U.S. Dollar Index is testing the next resistance level at the 20 EMA at 93.55.

If the U.S. Dollar Index moves above the 20 EMA, it will head towards the next resistance level at the 50 EMA at 93.80. This scenario will be bullish for USD/CAD.

Today, U.S. reported that its Inflation Rate was 1.4% year-over-year in September while Core Inflation Rate was 1.7%. Inflation was a bit softer than the analyst consensus, and the reports put pressure on U.S. government bond yields.

Meanwhile, oil managed to get back above the $40 level as traders cheered optimistic trade data from China. In addition, IMF released its new economic forecast which was more optimistic than the previous one.

However, rising oil failed to provide support to commodity-related currencies including Canadian dollar as dollar’s upside move was very strong.

Technical Analysis

usd cad october 13 2020

USD to CAD gained upside momentum and is currently trying to get above the resistance level at 1.3135. This resistance level has already been tested several times in recent trading sessions and proved its strength.

In case USD to CAD moves above the resistance at 1.3135, it will head towards the major resistance level at 1.3200. RSI is in the moderate territory and there is plenty of room to gain momentum in case the right catalysts emerge.

If USD to CAD gets above 1.3200, it will move to the test of the resistance at the 20 EMA at 1.3235. A move above the 20 EMA will open the way to the test of the next resistance level at the 50 EMA at 1.3255.

On the support side, some support for USD to CAD has emerged near 1.3100. If USD to CAD manages to settle below this support level, it will gain downside momentum and head towards the next support level at 1.3050.

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

Economic Data and Brexit Put the Pound in the Spotlight

Earlier in the Day:

It’s was a busier start to the day on the economic calendar this morning. The Kiwi Dollar was in action, with economic data out of China also in focus this morning.

While economic data was of influence, news of Johnson & Johnson hitting pause on its vaccine trials weighed on riskier assets. A reported pause in the J&J trial due to a patient becoming ill weighed on risk appetite as new COVID-19 cases continue to rise. Adding to the negativity was news from China of its 1st COVID-19 case since August.

For the Kiwi Dollar

Electronic card retail sales rose by 5.4% in September, reversing most of a 7.9% slide from August. Compared with September 2019, spending was up by 7.3%. In August, spending had been down by 0.8%, year-on-year.

According to NZ Stats,

  • Spending on durables rose by 19%, with spending on motor vehicles (excl. fuel) up by 15%, year-on-year.
  • There were also marked increases in spending on consumables (10%) and apparel (6.6%).
  • Compared with September 2019, spending on hospitality (-4.9%) and fuel (-11%) declined, however.
  • The rise in spending in September 2020 was attributed to fewer COVID-19 restrictions when compared with August 2020. The COVID-19 alert level for Auckland was lowered from level 3 to level 2.
  • Spending on hospitality and fuel rose by 13% and by 11% respectively in the month.

The Kiwi Dollar moved from $0.66451 to $0.66475 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.08% to $0.6642.

Out of China

China’s US Dollar trade surplus narrowed from $58.93bn to $37bn in September. Economists had forecasted a narrowing to $58.0bn.

  • Exports rose by 9.9%, compared with September 2019, following a 9.5% jump in August. Economists had forecasted a 10.0% increase.
  • Imports increased by 13.2%, following a 2.1% slide in August. Economists had forecast a 0.3% rise.

At the time of writing, the Aussie Dollar was down by 0.51% to $0.7172. The Aussie Dollar showed little response to the numbers, the early slide coming from risk-off sentiment early on.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.05% ¥105.38 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Key stats include ZEW Economic Sentiment figures for Germany and the Eurozone. Finalized September inflation figures for Germany are also due out but should have a muted impact on the EUR.

Away from the economic calendar, any further talk of a reintroduction of lockdown measures, Brexit, and U.S politics will also influence.

At the time of writing, the EUR was down by 0.15% to $1.1795.

For the Pound

It’s a busy day ahead on the economic calendar. Key stats include September’s claimant counts and August’s unemployment rate and employment change figures.

With the UK seeing a marked increase in new COVID-19 cases in September, any jump in claimant counts will weigh.

Earlier in the day, the BRC Retail Sales Monitor rose by 6.1% in September, year-on-year. In August, the Monitor had risen by 4.7%. The upbeat data failed to provide early support for the Pound, however.

Away from the economic calendar, updates from Brexit negotiations ahead of the EU Summit will be key.

At the time of writing, the Pound was down by 0.15% to $1.3045.

Across the Pond

It’s a relatively busy day ahead for the U.S Dollar. September inflation figures are due out later today.

Barring particularly dire numbers, however, the stats are unlikely to have a material impact on the U.S Dollar. Weak numbers would test market risk sentiment that would be Dollar positive…

Away from the economic calendar, U.S politics will remain the key driver on the day. Updates from Capitol Hill on stimulus talks and U.S Presidential Election campaign chatter will influence.

The Dollar Spot Index was up by 0.12% to 93.176 at the time of writing.

For the Loonie

It’s a quiet day ahead, with no material stats to provide the Loonie with direction.

While there are no material stats, OPEC’s monthly report should provide crude oil prices with direction after last week’s supply disruption driven bounce.  Any doom and gloom on demand and expect the Loonie to struggle.

At the time of writing, the Loonie was down by 0.14% to C$1.3133 against the U.S Dollar.

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

USD/CAD Daily Forecast – Attempt To Settle Below 1.3100

USD/CAD Video 12.10.20.

Canadian Dollar Tries To Move Higher Despite Weak Oil

USD/CAD is currently trying to settle below 1.3100 while the U.S. dollar is flat against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle below the 93 level but did not manage to gain sufficient downside momentum. If the U.S. Dollar Index gets below the 93 level, it will head towards the nearest material support at 92.80 which will be bearish for USD/CAD.

Oil is losing ground today but Canadian dollar managed to ignore oil’s weakness. However, additional oil price downside may ultimately put some pressure on the Canadian currency.

U.S. and Canada did not release any important economic reports today so USD/CAD remained in the hands of general market sentiment. Tomorrow, U.S. will release Inflation Rate and Core Inflation Rate reports for September which will indicate whether inflation is gaining steam in the U.S.

The U.S. Fed has previously signaled that it was ready to tolerate inflation above 2% but the pace of pricing recovery will also matter for policymakers.

Technical Analysis

usd cad october 12 2020

USD to CAD managed to settle below the support at 1.3135 and is trying to get below 1.3100. If USD to CAD manages to move below 1.3100, it will likely gain additional downside momentum and head towards the next support level at 1.3050.

A move below 1.3050 will open the way to the test of September lows at 1.3000. There are no important levels between 1.3000 and 1.3050 so this move may be fast.

On the upside, the nearest resistance level for USD to CAD is located at the previous support at 1.3135. This resistance level has already been tested during the current trading session and proved its strength.

If USD to CAD manages to get above the resistance at 1.3135, it will gain upside momentum and head towards the major resistance level at 1.3200. A move above the resistance at 1.3200 will push USD to CAD towards the next resistance level which is located at the 20 EMA at 1.3235.

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

A Quiet Economic Calendar Leaves Brexit, COVID-19, and U.S Politics in Focus

Earlier in the Day:

It’s was a 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. Later this morning, new loan figures from China will draw interest as the markets continue to eye China’s economic rebound.

For the Japanese Yen

Core machinery orders were in focus in the early hours.

According to the Cabinet Office, core machinery orders rose by 0.2% in August, following a 6.3% jump in July. Economists had forecast a 1% decline. Year-on-year, orders were down by 15.2%, which was better than a forecasted 15.6% slide. In July, orders had been down by 16.2%.

The Japanese Yen moved from ¥105.634 to ¥105.636 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.02% ¥105.60 against the U.S Dollar

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.18% to $0.7227, with the Kiwi Dollar down by 0.08% to $0.6661.

The Day Ahead:

For the EUR

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

A lack of stats will leave the EUR in the hands of geopolitics and market risk sentiment. U.S Presidential Election campaign chatter and Brexit will be the key drivers on the day.

On the monetary policy front, ECB President Lagarde is scheduled to speak. Expect any chatter on policy or the economic outlook to also provide direction.

At the time of writing, the EUR was down by 0.06% to $1.1819.

For the Pound

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

The lack of stats will leave the Pound firmly in the hands of Brexit as the final round of talks kicks off this week.

News from the weekend was certainly not upbeat, as news hit the wires of Johnson and Macron having a fiery call. The French President continues to take a hardline, while other EU member states are eager to compromise.

At the time of writing, the Pound was down by 0.04% to $1.3031.

Across the Pond

It’s also a particularly quiet day ahead for the U.S Dollar. There are no material stats to provide the Dollar with direction.

A lack of stats will leave the focus on COVID-19 stimulus updates and U.S Presidential Election news.

The Dollar Spot Index was up by 0.04% to 93.098 at the time of writing.

For the Loonie

It’s a quiet day ahead, with no material stats to provide the Loonie with direction.

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

At the time of writing, the Loonie was down by 0.06% to C$1.3129 against the U.S Dollar.

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

The Week Ahead: A Brexit Showdown, U.S Politics, and Economic Data in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 68 stats in focus in the week ending 16th October. In the week prior, 53 stats had been in focus.

For the Dollar:

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

On Monday and Tuesday, September inflation and wholesale inflation figures are due out.

The focus then shifts to manufacturing sector activity and labor market numbers on Thursday.

Expect the Philly FED Manufacturing PMI for October and the weekly initial jobless claims to impact.

At the end of the week, retail sales and industrial production figures are due out, along with October consumer sentiment numbers.

Expect the retail sales and prelim Michigan consumer Sentiment figures to have the greatest impact.

Away from the calendar, the next Presidential debate on 15th October will also provide direction. That is assuming that Trump decides to attend…

The Dollar Spot Index ended the week down by 0.84% to 93.057.

For the EUR:

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

On Tuesday, ZEW Economic Sentiment figures for Germany and for the Eurozone are in focus.

Expect some EUR sensitivity to the numbers on the day.

The focus will then shift to Eurozone industrial production figures for August, due out on Wednesday.

At the end of the week, the Eurozone’s trade figures for August will also garner some interest.

Finalized inflation figures for member states and the Eurozone are also due out. Barring deviation from prelims, however, the numbers should have a muted impact on the EUR.

On the monetary policy front, ECB President Lagarde is scheduled to speak on a number of occasions in the week. Expect any forward guidance or views on the economy to influence.

Away from the economic calendar, Brexit and COVID-19 will need monitoring throughout the week.

The EUR/USD ended the week up by 0.94% to $1.1826.

For the Pound:

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

September claimant counts and August’s unemployment rate are due out on Tuesday and will influence.

BRC Retail Sales Monitor figures, due out in the early hours of Tuesday, will also draw some attention.

August’s employment change and average earnings figures are also due out but should have a muted impact on the day.

Away from the calendar, Brexit and COVID-19 will also provide direction. David Frost is due to attend talks in Brussels. The markets will be looking for an agreement.

The GBP/USD ended the week up by 0.78% to $1.3036.

For the Loonie:

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

In a shortened week, August manufacturing sales figures on Friday will provide direction.

Market risk sentiment and crude oil prices will drive the Loonie ahead of Friday’s numbers.

OPEC and the IEA’s monthly reports are due out in the week. Projections on demand will be of particular interest as the global economic recovery sputters.

The Loonie ended the week up by 1.41% to C$1.3121 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

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

On Wednesday, consumer confidence figures are in focus ahead of September employment figures on Thursday.

Expect the employment figures to have a material impact on the Aussie Dollar.

At the end of the week, new home sales figures will likely have a muted impact on the Aussie.

On the monetary policy front, RBA Governor Lowe is scheduled to speak on Thursday. Expect the Aussie Dollar to be particularly sensitive to any chatter on monetary policy.

While the stats will influence, economic data from China and U.S politics will be the key drivers.

The Aussie Dollar ended the week up by 1.10% to $0.72400.

For the Kiwi Dollar:

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

Key stats include Electronic card retail sales figures on Tuesday and Business PMI numbers on Friday.

Expect both sets of numbers to influence in the week.

While the stats will influence, economic data from China and updates from Washington will be the key drivers.

From China, trade, industrial production, and inflation figures will influence in the week.

The Kiwi Dollar ended the week up by 0.38% to $0.6666.

For the Japanese Yen:

It is a relatively quiet week on the economic calendar.

Key stats include core machinery orders, finalized industrial production, and tertiary industry activity figures.

We would expect the core machinery order numbers to garner the greatest interest in the week.

The key driver for the Japanese Yen, however, will be chatter from Capitol Hill and the U.S Presidential Election race.

The Japanese Yen ended the week down by 0.31% to ¥105.62 against the U.S Dollar.

Out of China

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

Mid-week, September trade figures will draw plenty of attention. The markets will be eyeing both the import and the export figures.

The focus will then shift to inflation, industrial production, and unemployment figures due out on Thursday.

Fixed asset investment figures are also due out but would likely have a muted impact on the markets.

The Chinese Yuan ended the week up 1.42% to CNY6.6947 against the U.S Dollar.

Geo-Politics

UK Politics:

It’s last chance saloon for Britain and the EU to come up with the needed compromises to deliver a trade agreement.

Expect plenty of chatter as the markets continue to pin hope on a last-minute agreement.

Failure to come up with a deal will sink the Pound, which has very little going for it at present.

The UK economy is in trouble and the government is expected to inflict more pain in the week ahead. A sharp pickup in new COVID-19 cases is going to force the government to reintroduce containment measures this week.

U.S Politics

There’s never a dull moment in U.S politics and the markets have abandoned Trump and his quest for a 2nd term.

Trump and Biden are scheduled to go head-to-head in the 2nd of 3 debates on Thursday.

Following Trump’s hospitalization, however, the debate had been changed to a virtual debate. The U.S President had responded by refusing to take part, which led to the cancellation of this week’s debate. For Trump, the next debate is still on for 22nd October. It may be too late, however… Trump’s latest loss was a court decision to allow the use of drop boxes and mobile sites to collect mail-in ballots in Pennsylvania. As a swing state, the Republicans are eager to overturn the ruling… It would be a blow should Trump also lose the appeal…

With the polls favoring a Biden/Harris clean sweep, the markets have warmed to Biden’s policies.

While a repeal of Trump’s tax bills is expected, Biden is expected to deliver greater fiscal support.

Don’t expect Trump to go down without a fight, however, which should make things interesting…

The Weekly Wrap – Trump and U.S Politics Drove Demand for Riskier Assets

The Stats

It was a quieter week on the economic calendar, in the week ending 9th October.

A total of 43 stats were monitored, following 74 stats from the week prior.

Of the 43 stats, 23 came in ahead of forecasts, with 17 economic indicators came up short of forecasts. 3 stats were in line with forecasts in the week.

Looking at the numbers, 26 of the stats also reflected an upward trend from previous figures. Of the remaining 17 stats, 14 reflected a deterioration from previous.

For the Greenback, it was a 2nd consecutive week in the red, with the Dollar Spot Index falling by 0.84% to 93.057. In the week ending 2nd October, the Dollar Spot Index had fallen by 0.84% to 93.844.

Market risk appetite returned, with the U.S President returning to the Oval Office from the hospital. Stimulus was the key area of focus upon Trump’s return to the White House. Late in the week, Trump stated that stimulus talks with the Democrats had become productive. Nancy Pelosi was also upbeat, stating that she wanted a big deal.

On the U.S political front, there was also hope that a blue wave in the election would remove any contest over the outcome of the election.

Out of the U.S

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

Key stats included September’s ISM Non-Manufacturing PMIs, August JOLT’s job openings, and the weekly jobless claims figures.

A pickup in non-manufacturing sector activity was the only positive on the data front. The PMI increased from 56.9 to 57.8.

Employment figures raised more red flags, however. Job openings came up short of expectations and July levels in August.

The weekly jobless claims figures also suggested a possible stall in the labor market recovery.

In the week ending 2nd October, initial jobless claims came in at 840k, down marginally from 849k from the week prior.

For riskier assets, however, U.S politics and the continued hope of a COVID-19 relief Bill delivered support.

Concerns over a lengthy contest over the outcome of the U.S Presidential Election also eased in the week.

As things stand, the polls suggest a clean sweep for Biden and the Democrats. An orderly transition of power and easing political uncertainty was market positive in spite of Biden’s tax plans.

On the monetary policy front, the FOMC meeting minutes had a muted impact. FED Chair Powell, speaking mid-week, called on Congress to deliver more stimulus else face a slower economic recovery.

The comments had come ahead of Trump’s mid-week announcement to end stimulus negotiations until after the election.

In the equity markets, the NASDAQ rallied by 4.56%, with the Dow and S&P500 gaining 3.27% and 3.84% respectively.

Out of the UK

It was a busy week on the economic data front.

In the 1st half of the week, September PMIs were in focus. Upward revisions to the composite and services PMI and a pickup in construction sector activity were Pound positive.

The markets then had to wait until Friday, for GDP, trade, industrial production, and manufacturing production figures.

In August, Manufacturing production rose by just 0.7%, following a 6.9% jump in July. Economists had forecast a 3% increase.

The economy grew by 8% over the 3-months to August, reversing a 6.8% contraction in the 3-months to July.

There was a marked slowing in growth in August, however, with the economy growing by 2.1%. In July, the economy had grown by 6.4%.

Other stats including industrial production, which disappointed, and a mixed set of trade data that had a muted impact.

While the stats influenced, Brexit remained the key driver in the week. News of progress in talks and a possible willingness by Michel Barnier to compromise supported the Pound.

COVID-19 remained negative for the Pound, however. Expectations are for an announcement of more restrictions and further government support to limit the damage.

In the week, the Pound rose by 0.78% to $1.3036. In the week prior, the Pound had risen by 1.48% to $1.2935.

The FTSE100 ended the week up by 1.94%, following on from a 1.02% gain from the previous week.

Out of the Eurozone

It was another busy week on the economic data front.

In the early part of the week, September’s private sector PMIs for Italy and Spain and Eurozone retail sales figures were in focus.

Finalized PMIs for France, Germany, and the Eurozone also influenced, however.

The PMIs were skewed to the positive, with better than expected numbers from Italy. There were also upward revisions to Germany and the Eurozone’s services and composite PMIs.

Over the remainder of the week, the focus was on Germany. August factory orders, industrial production, and trade data were in focus.

While factory orders impressed, industrial production and trade data disappointed. The impact was muted, however, with the jump in factory orders aligned with Germany’s PMI numbers for September.

On the monetary policy front, the ECB monetary policy meeting minutes provided little influence late in the week.

For the week, the EUR rose by 0.94% to $1.1826. In the week prior, the EUR had risen by 0.73% to $1.1716.

For the European major indexes, it was another bullish week. The CAC40 and EuroStoxx600 rose by 2.53% and by 2.11% respectively, with the DAX30 gaining by 2.85%.

For the Loonie

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

Key stats included August trade data and September Ivey PMI and employment figures.

The stats were mixed in the week.

While the trade deficit narrowed marginally, the Ivey PMI tumbled from 67.8 to 54.3 in September.

The disappointing PMI number came ahead of the all-important employment figures.

In September, 378.2k jobs were added following 245.8k jobs in August. Economists had forecast a 156.6k increase in employment. The jump in employment brought the unemployment rate down from 10.2% to 9.0%. Economists had forecast a fall in the unemployment rate to 9.7%.

Adding to the upside for the Loonie was a jump in crude oil prices in the week. WTI rallied by 9.58%, with Brent up by 9.12%.

The Loonie rose by 0.87% to end the week at C$1.3121. In the week prior, the Loonie had risen by 0.58%.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 9th October, the Aussie Dollar rose by 1.10% to $0.72400. The Kiwi Dollar ended the week up by 0.38% to $0.6666. A bullish end to the week delivered the upside for the pair.

For the Aussie Dollar

It was a relatively quiet week on the economic calendar.

Key stats business confidence and trade data.

It was a mixed bag, with business confidence improving, while the trade surplus narrowed.

While the stats did provide direction, the RBA’s monetary policy decision was the main event of the week.

The RBA stood pat on policy while continuing to assure the markets of further support should the need arise. Some positive views on the recovery in labor market conditions provided the Aussie Dollar with support.

At the end of the week, the RBA Financial Stability Review also painted a relatively robust picture. The positive views on Australia’s financial stability added further support to the Aussie Dollar.

For the Kiwi Dollar

It was a quiet week on the economic calendar.

Key stats included business confidence figures for October.

The ANZ Business Confidence Index rose from -28.5 to -14.5 according to prelim figures.

Another widespread improvement in forward-looking indicators supported the improvement in confidence.

For the Japanese Yen

It was a relatively quiet week on the economic calendar.

September’s finalized services PMI and August household spending figures were in focus.

While there was an upward revision to the services PMI, the sector continued to contract at a marked pace.

Household spending also failed to impress. While spending up by just 1.7% in August, spending was down by 6.9% year-on-year.

The figures continued to reflect a weak economic recovery.

The Japanese Yen fell by 0.31% to ¥105.62 against the U.S Dollar. In the week prior, the Yen had risen by 0.27%.

Out of China

It was a quiet week on the economic data front, with China on Holiday for 4 of the 5 days.

Key stats included September’s private sector PMIs, which were positive for market risk sentiment.

September’s Caixin Service PMI at the end of the week was the only major start for the markets to consider.

An increase from 54.0 to 54.8 continued to support the positive sentiment towards the economic recovery.

The upside came from domestic demand, as overseas orders continued to decline.

In the week ending 9th October, the Chinese Yuan rose by 1.42% to CNY6.6947. In the week prior, the Yuan had risen by 0.48%.

The CSI300 rose by 2.04%, with the Hang Seng gaining 2.81%.

USD/CAD Daily Forecast – Canadian Dollar Is Moving Higher Against U.S. Dollar

USD/CAD Video 09.10.20.

U.S. Dollar Is Under Serious Pressure Ahead Of The Weekend

USD/CAD gained strong downside momentum and is currently testing the support at 1.3135 as the U.S. dollar continues to lose ground against a broad basket of currencies.

The U.S. Dollar Index settled below the support at 93.35 is moved towards the 93 level. The nearest material support level for the U.S. Dollar Index is located at 92.80 so there is plenty of room to develop additional downside momentum. If this happens, USD/CAD will have a good chance to settle below 1.3135.

Today, Canada provided Employment Change report which indicated that the Canadian economy added 378,200 jobs in September. Analysts expected job growth of 156,600.

Canada’s Unemployment Rate declined from 10.2% in August to 9% in September compared to analyst consensus of 9.7%. Canada’s employment reports were much better than expected and provided material support to the Canadian currency.

Meanwhile, traders continue to follow the U.S. stimulus story. Recently, U.S. Senate Majority Leader Mitch McConnell stated that lawmakers were unlikely to reach consensus on a new coronavirus package deal before the election in November.

The U.S. economy needs additional stimulus and the economic recovery may slow down without additional aid. However, the stimulus story had so many twists that it’s too early to tell whether Republicans and Democrats will fail to make any deal in the upcoming weeks.

Technical Analysis

usd cad october 9 2020

USD to CAD is currently trying to settle below the nearest support level at 1.3135. In case this attempt is successful, USD to CAD will head towards the next support level at 1.3050.

There are no material levels between 1.3050 and 1.3135 so the downside move may be fast in case the U.S. dollar continues to lose ground against a broad basket of currencies. If USD to CAD gets below 1.3050, it will head towards September lows at 1.3000.

On the upside, a move above 1.3135 will open the way to the test of the resistance level at 1.3200. In case USD to CAD manages to settle above 1.3200, it will head towards the 50 EMA at 1.3270 although it may also face resistance at 1.3235.

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

A Quiet Economic Calendar Leaves Geopolitics and COVID-19 in Focus

Earlier in the Day:

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

Away from the economic calendar, chatter from the U.S also provided direction in the early part of the Asian session. Hopes of further U.S COVID-19 relief stimulus drove demand for riskier assets early in the day. The risk-on sentiment led to an early pullback in the Greenback.

For the Japanese Yen

Household spending figures were in focus. In August, spending rose by 1.7%, month-on-month, falling short of a forecasted 3.2% rise. In July, spending had slumped by 6.5%.

Year-on-year, spending slid by 6.9%, following a 7.6% tumble in July. Economists had also forecast a 6.9% fall.

According to the Statistic Bureau,

  • Spending on culture & recreation (-23.4%) and clothing & footwear (20.2%) weighed heavily on the headline figure.
  • There were also marked declines in spending on transportation & communication (-12.5%) and food (-3.9%).
  • By contrast, there were marked increases in spending on medical care (+11.7%), furniture & household utensils (+8.1%), and fuel, light, & water charges (+6.2%).
  • Spending on housing rose by a modest 1.1%, year-on-year.

The Japanese Yen moved from ¥106.024 to ¥106.018 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.16% ¥105.86 against the U.S Dollar

For the Aussie Dollar

The RBA released its financial stability review early this morning. Highlights from the review included:

  • Households’ finances in Australia have been cushioned from the impact of the pandemic by support measures. Despite a sharp decline in output and falling employment, overall household income increased with large fiscal stimulus payments. Households have greatly increased their saving.
  • Most businesses started with low debt going into the crisis. Support measures helped maintain cash flow despite the sharp reduction in revenue.
  • The strong Australian financial system can support economic recovery. Banks have high capital levels and most of their loans are well-secured.

The Aussie Dollar moved from $0.71689 to $0.71699 upon release of the review that preceded China’s services PMI.

Out of China

The service sector was in focus this morning. September’s Caixin Service PMI rose from 54.0 to 54.8. Economists had forecast a fall to 53.0.

According to the September survey,

  • Growth was supported by a marked increase in total new business, though new export work continued to decline.
  • Firms expanded payrolls for the 2nd consecutive month amid increased capacity pressures.
  • Prices charged by service companies rose for the 2nd month in a row. There were some reports of tough market competition, however, that limited overall pricing power.
  • Service providers recorded a much softer rise in operating expenses at the end of the quarter. The rate of inflation dipped to a 3-month low and was only marginal.
  • Business confidence remained strongly positive. The degree of positive sentiment was firmer than in August and broadly in line with the historical average.

The Aussie Dollar moved from $0.71771 to $0.71817 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.22% to $0.7181.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.41% to $0.6604.

The Day Ahead:

For the EUR

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

A lack of stats will leave the EUR in the hands of geopolitics and market risk sentiment. U.S Presidential Election campaign chatter, updates from Capitol Hill, and Brexit will likely be the key drivers on the day.

At the time of writing, the EUR was up by 0.14% to $1.1775.

For the Pound

It’s a particularly busy day ahead on the economic calendar. Key stats include August GDP and manufacturing production figures. Industrial production and trade data, also due out, will likely have a muted impact on the Pound.

Away from the economic calendar, however, expect Brexit to continue to be a key driver.

At the time of writing, the Pound was up by 0.13% to $1.2955.

Across the Pond

It’s a particularly quiet day ahead for the U.S Dollar. There are no material stats to provide the Dollar with direction.

A lack of stats will leave the focus on COVID-19 stimulus updates and U.S Presidential Election news.

The Dollar Spot Index was down by 0.13% to 93.482 at the time of writing.

For the Loonie

It’s a relatively busy day ahead. September employment figures are due out later today. Expect the numbers to influence.

At the time of writing, the Loonie was up by 0.08% to C$1.3186 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 1.3200 In Sight

USD/CAD Video 08.10.20.

Canadian Dollar Gains Ground On Stronger Oil

USD/CAD managed to settle below the 50 EMA at 1.3280 and is testing the next support level at 1.3235 as oil is gaining ground amid fears that oil workers’ strike will escalate and lead to tighter supply in the upcoming weeks.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, failed to settle below 93.50 and rebounded closer to the 50 EMA at 93.65.

If the U.S. Dollar Index manages to get below 93.50, it will have a chance to develop additional downside momentum which will be bearish for USD/CAD.

Today, U.S. reported that Initial Jobless Claims increased from 837,000 to 840,000 while Continuing Jobless Claims declined from 11.77 million to 10.98 million.

These reports had little impact on currency markets as traders preferred to focus on coronavirus aid package negotiations.

Republicans and Democrats look ready to negotiate a $25 billion aid package to support airlines. Recently, U.S. President Donald Trump stated that current discussions also included a next round of $1,200 stimulus checks.

Stimulus talks provided some support to the U.S. dollar against a broad basket of currencies but the rally in oil prices has finally managed to boost the Canadian dollar, putting pressure on USD/CAD.

Technical Analysis

usd cad october 8 2020

USD to CAD moved below the 50 EMA at 1.3280 and got to the test of the support level at 1.3235.

If USD to CAD manages to settle below the support level at 1.3235, it will head towards the major support level at 1.3200. Most likely, USD to CAD will need additional catalysts to get below 1.3200.

If this happens, USD to CAD will gain additional downside momentum and move towards the next support level at 1.3175. A move below 1.3175 will open the way to the test of another significant support level at 1.3135.

On the upside, the previous support at the 50 EMA at 1.3280 will serve as the first resistance level for USD to CAD. If USD to CAD settles above this level, it will head towards the next resistance level at the recent highs at 1.3330.

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