It isn’t quite an 11th-hour reprieve, but UK Prime Minister Theresa May got the EU to tweak her Brexit plan. That’s the one that British MP’s rejected by a vote of 432 opposed and 202 for. The thorny Irish border backstop still can’t be unilaterally ended by the UK, but gives them room to an exit via an arbitration process at the UN. There is a lot more, but Ms May still has to convince a minimum of 116 MP’s to change their vote which is supposed to occur today. GBPUSD soared on the news, rising from 1.3151 to 1.3286 in early Asia trading. Prices have since retreated and are back to yesterday’s closing level.
UK economic data was largely ignored. January GDP rose 0.5% (forecast 0.2%) while Industrial and Manufacturing Production reports were a tad higher than expected.
There was a modest improvement in risk sentiment overnight In addition to the Brexit news; there were reports that US Trade Representative Robert Lighthizer and China Vice Premier Liu He chatted about the text of a trade agreement and plans for the next stages. That’s it, but it was enough to lift the commodity currency bloc, albeit, very modestly.
EURUSD bounced within a 1.1250-1.1282 range overnight and is trading in the middle of that band in New York.
WTI oil prices climbed in concert with the improved risk tone, rising from $56.81/barrel to $57.78/b, underpinned by Saudi Arabia’s plans to trim production and ongoing Venezuela issues.
The rise in oil prices kept USDCAD in a narrow band Prices are supported by the dovish Bank of Canada outlook and bullish technicals while rising oil prices limit losses.
US CPI is expected to rise 1.6%, y/y in February unchanged from January and if so, a non-factor for FX. FX markets will take their cue for Wall Street, and US equity futures suggest a strong open, this morning. There are not any Canadian economic reports today.
The intraday USDCAD are bullish but prices are consolidating inside a 1.3380-1.3450 range. A break below the March uptrend line at 1.3380 would target 1.3340 and then 1.3240. A break above the 1.3460-80 resistance zone shifts the focus to 1.3550.
Today’s Range 1.3380-1.3450