UK traders billed today as “Super Thursday.” For GBPUSD bulls it wasn’t all the super. In fact, it was downright nasty. The Bank of England left interest rates unchanged which was surprise to a handful of traders. The decision wasn’t unanimous; the vote was 6-2, but it was an improvement over the June meeting where the vote was 5-3.
Adding to Sterling’s woes was the downgrade of inflation and growth forecasts in the Inflation Report. Bank of England Governor Mark Carney said that the bank’s latest forecast take into account the uncertainty around Brexit. GBPUSD dropped from an overnight peak of 1.3267 to 1.3114 in New York trading.
USDJPY traders bought dollars after the Initial Jobless Claims data although the bump was insignificant. The currency pair is stuck inside a 110.30-110.80 range with traders on hold until after the nonfarm payrolls data on Friday.
EURUSD price action has been benign with prices hovering around 1.1850
The antipodeans had a lively session in Asia. The ANZ Commodity Price index dropped to 0.8% in July, well below the 2.1% gain recorded in June. NZDUSD dropped from 0.7429 to 0.7393. Prices recovered somewhat in Europe and Kiwi opened today at 0.7408.
AUDUSD suffered a similar fate as Kiwi. The June Trade surplus narrowed to AUD 856 million from AUD 2.02 billion in May. China Services PMI were a tad weaker than forecast at 51.5 (forecast 51.9) but didn’t have much impact.
Oil prices traded lower overnight, Prices closed at $49.60 on Wednesday and dropped to $49.10 in Europe before spiking to $49.85. Traders are torn between yesterday’s US crude inventory draw-down and concerns about rising Opec production.
USDCAD hit 1.2410 last Friday and since then, it’s been on a one-way street higher. Nothing has changed in the Canadian dollar outlook. The Bank of Canada is in tightening mode while the Fed has it the pause button. The domestic economy is growing, there hasn’t been a housing market crash and oil prices are rising. That suggests this week’s rally is more a factor of positioning and perhaps a buy USDCAD order is being worked.
USDCAD Technical outlook:
The intraday USDCAD technicals are bullish following the break above 1.2505 on Tuesday which was the downtrend line after the Bank of Canada hiked interest rates on July 12. The move above 1.2550 suggests that a short-term bottom is in place at 1.2410. A move above 1.2620 opens the door to 1.2710. For today, USDCAD support is at 1.2560 and 1.2520. Resistance is at 1.2620 and 1.2680.
Today’s Range 1.2560-1.2620
Chart 1 hour