FOMC decision day is today and traders are being cautious. They want to see how Fed Chair Jerome Powell interprets the Committee decision after his December debacle. You will recall that global equity markets tanked and the US dollar soared when Mr Powell said rates were going higher and balance sheet reduction was on auto-pilot. He backtracked on those statements on January 4, and a series of Fed speakers have indicated that they are on hold. A dovish Fed statement is widely expected, but that should be already priced in.
GBPUSD dropped from 1.3165 to 1.3067 yesterday afternoon after Theresa May was given a mandate to reopen negotiations with the European Union about the Ireland backstop agreement. A spokesman for EU President Donald Tusk said: “dream on.” Actually, he said, “The backstop is part of the withdrawal agreement, and the withdrawal agreement is not open for re-negotiation.”
EURUSD traded sideways in a 1.1425-1.1448 band, trading with a modestly negative bias due to soft Eurozone data. January Consumer Confidence, Business Climate and Economic Sentiment were below forecasts.
AUDUSD rallied on the back of higher CPI (Actual 1.8% vs forecast 1.7%, q/q) and firmer commodity prices.
US ADP employment and Pending Home Sales data are due today but should not have much impact on trading. Traders will be looking for news from the China/US trade talks today.
USDCAD opened at the bottom of its overnight ranges. A rebound in WTI oil prices and demand for commodity block currencies weighed on the currency pair. Traders may be leery about expectations for further downside ahead of Thursday’s GDP data. November GDP is expected at -0.1%.
The intraday USDCAD technicals are bearish while prices are below 1.3270 and looking for a test of support at 1.3200, which if broken would extend losses to the 1.3140-60 support zone. The 100 day moving average at 1.3208 adds another level of support. For today, USDCAD support is at 1.3200 and 1.3150. Resistance is at 1.3270 and 1.3320
Today’s Range 1.3170-1.3250