Overnight Range 1.3201-1.3248
The ECB announced an extension to the quantitative easing program (QE) to the end of 2017 but at a reduced pace. The ECB will now purchase up to €60 million of eligible assets, down from €80 billion per month. EURUSD -plummeted from 1.0870 to 1.0637 on the news.
This mornings move in EURUSD would appear to justify the overnight jitters in FX markets.
Overnight, the US dollar retreated further from yesterday’s close in a somewhat nervous session. Traders were a tad skittish as they await the European Central Bank interest rate statement and Mario Draghi’s press conference.
Asia traders were treated to a speech by the Reserve Bank of New Zealand Governor Graeme Wheeler. He said he sees “continued strong growth:” for the economy. NZDUSD got a small boost.
China announced a dip in its Trade Balance to $44.61 billion, in part due to a 13.0% rise in imports. Aussie traders liked the news and AUDUSD rose, extending Wednesday’s US gains.
USDJPY was sold in Asia, undermined by a small dip in Treasury yields. Japan data releases were mixed. Q3 GDP was 1.3%, y/y (forecast 2.4%) while the Trade Balance was in line with forecasts.
USDJPY rebounded to 113.72 in Europe but could not hang on to the gains. The currency pair opened in New York at 113.30
EURUSD added to yesterday’s US gains and hovered around 1.0800 with traders sidelined ahead of the looming ECB meeting.
The US dollar weakness against the majors provided support to Sterling. GBPUSD rallied from 1.2610 to 1.2702
Oil prices edged lower in Asia trading, touching $49.50 before climbing back to $50.42 in Europe. The intraday downtrend from Monday remains intact while prices are below $50.60.
The Canadian dollar scratched out additional gains overnight finding a modicum of support from WTI prices that climbed back above $50.00/barrel.
Yesterday, the Bank of Canada left rates unchanged. The statement suggests that domestic interest rates will not be changing anytime in the foreseeable future.
There isn’t any Canadian or US data releases of note today,
USDCAD technical outlook
The intraday, USDCAD technicals are bearish while trading below 1.3250 looking for a test of 1.3190. A move below this level will extend losses to 1.3160, representing the 38.2% Fibonacci retracement level of the May-November range. That level is also guarding the medium turn uptrend line from May, which comes into play at 1.3080. USDCAD needs to decisively break above 1.3290 to negate the downward pressure and shift the focus to the top.
For today, USDCAD support is at 1.3190 and 1.3160. Resistance is at 1.3250 and 1.3290.
Today’s Range 1.3190-1.3260