FX traders had a ton of economic data and reports to sink their teeth into overnight, but the data did not translate into large FX moves. Instead, the greenback inched higher supported by expectations that the FOMC meeting statement and economic projections will be hawkish.
EURUSD traded quietly and in a tight band in Asia and early Europe. German and Eurozone ZEW Economic Sentiment Index data was lower than expected (EZ Actual 13.4 vs forecast 28.1, Germany Actual 5.1 vs forecast 13.0). Increased concern about trade wars led to the drop. EURUSD fell from 1.2353 to 1.2313 on the news.
Sterling held on to yesterday’s EU/UK Brexit transition deal gains and 1.4021-64 range. Traders were not overly bothered by a slew of weaker-than-expected UK economic reports UK CP rose 0.4% in February below the 0.5% forecast, m/m. PPI and Retail Price Index also missed forecasts. Traders were focused on Wednesday’s FOMC and Thursday’s Bank of England meetings.
USDCHF traded in a very narrow 0.9501-0.9521 range. Traders ignored minor upward tweaks to the Swiss government’s inflation and growth forecasts.
USDJPY dipped early and then rallied until mid-morning in Europe where prices dipped from 106.59 to 106.09. The move was in response to weaker than expected German and Eurozone ZEW Economic Sentiment Surveys for March.
The countdown to the FOMC meeting trapped the antipodean currencies in tight bands. The RBA minutes were upbeat, expecting above trend wage and inflation growth, which wasn’t news.
Asia equity indices followed Wall Street lower with the Nikkei down 0.47%. The trend did not continue in Europe. European bourses moved higher, and all are in the green, at the moment. US equity futures point to a mixed-to-flat opening.
Oil prices added to yesterday’s gains rising from $62.08 to $62.76/barrel. Prices are supported by Saudi/Iran tension and falling Venezuela crude production.
The Canadian dollar was ignored in overnight markets. USDCAD sentiment is bullish due to trade concerns and the prospect of widening CAD/US interest rate differentials.
There isn’t any Canadian or US data of note on tap today. FX markets are likely to remain range bound until Wednesday afternoon‘s FOMC meeting.
USDCAD Technical Outlook
USDCAD is consolidating its recent gains inside a narrow 1.3040-1.3125 range. A break through the top will extend the rally to 1.3150 while a move below 1.3040 will lead to a retest of support in the 1.3000-15 area. For today, USDCAD support is at 1.3060, 1.3040 and 1.3015. Resistance is at 1.3090 and 1.3125.
Today’s Range: 1.3040-1.3125.
