USD/CAD - Canadian Dollar Rangebound

The Canadian dollar tested resistance and support in the past 24 hours and both levels held. Canadian dollar gains face a big hurdle in that some economists are forecasting the Bank of Canada will be forced to cut interest rates before the end of this year. Strong technical resistance levels are thwarting Canadian dollar upside moves.

The U.S. and China are not currently discussing trade issues, and that has raised concerns of a prolonged trade dispute slowing global economic growth. U.S. Treasury Secretary Stephen Mnuchin said that the trade discussions would resume after President Trump and Chinese President Xi Jinping meet during the Osaka, Japan G-20 meeting. The lack of trade talk progress has kept the risk aversion pilot-light burning and dampened FX trading enthusiasm.

The China/U.S. dispute overshadowed upbeat economic data in Australia. Australia added 42,300 new jobs in May, and the unemployment rate was unchanged at 5.2%. Consumer Inflation expectations were 3.3%, as forecast. AUD/USD rallied on the headlines but quickly changed course, opening in Toronto with a small loss compared to yesterday’s closing level. NZD/USD tracked AUD/USD lower, and dovish central bank policies undermined both currency pairs.

The Canadian dollar got a lift when oil prices spiked from $51.09 U.S./barrel at yesterday’s close to $53.09/b at the European open. Prices soared on news that two oil tankers were attacked in the Gulf of Oman. Traders are concerned that the risk of supply disruption in the region combined with rising expectations that the Organization of the Petroleum Exporting Countries and Russia will extend production cuts until the end of the year will more than offset risks from slowing demand due to the U.S./China trade war and rising U.S. crude supplies.

The Canadian dollar was testing support before the news and managed to squeeze out small gains, despite the modest shift into risk aversion trading.

In Europe, USD/CHF traded lower after the Swiss National Bank left rates unchanged. The currency got an additional boost after an SNB board member said there was a high risk of renewed upward pressure on CHF due to the many hotspots around the world.

EUR/USD traded in a narrow range, and traders ignored Industrial Production data, hoping for improved from U.S. Retail Sales data on Friday.

GBP/USD traded with bearish bias after rejecting topside gains yesterday. Prices continue to be weighed down by "no-Deal” Brexit concerns which will be exacerbated if Boris Johnson becomes Prime Minister.

Today’s Canadian data includes New Housing Price index while the U.S. releases Jobless claims and Import/Export Price data.

Rahim Madhavji is the President of, a Canadian currency exchange that provides better rates than the banks to Canadians

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