USDCAD Open (6:00 am) 1.3298-01 Overnight Range 1.3277-1.3313
F“Fed forecasts moving up, forecasts moving down.
Why, because the data’s moving ‘round.
Euronations, Brexit-tations, Trade delegations, aggravation,
Ball of Confusion, that’s what the Fed is today.”
The FOMC went full-Monty dovish yesterday. They didn’t leave anything to the imagination. They left interest rates unchanged and downgraded 2019 rate hike forecasts from two to none. Chair Powell said that the Fed is not sending an interest rate signal for either direction. He has a favourable economic outlook, expecting GDP growth at 2%, and inflation at target.
FX markets concluded the Fed was far more dovish than expected and sold US dollars across the board. EURUSD soared from 1.1336 just before the Fed announcement to 1.1446 immediately afterwards. Prices retreated steadily in Europe as traders decided that owning US dollars was better than the alternatives.
USDJPY collapsed from 111.48 to 110.56 and then added to the losses overnight coinciding with a slide in US 10 year Treasury yields from 2.56% to 2.50%.
USDCHF dropped from 0.9975 to 0.9895 around the Fed but rallied to 0.9933 this morning when the Swiss National Bank left interest rates unchanged but complained about the “highly valued” currency.
GBPUSD’s post-FOMC rally was derailed by Brexit concerns which overshadowed better than expected February UK Retail Sales data. (Actual 4.0% vs forecast 3.3%) GBPUSD got hammered again in early New York trading when reports surfaced that the EU would deny the British request for a three-month extension to Article 50, saying the deadline can’t go beyond May 22 because of EU member state elections.
AUDUSD got a lift from the Fed and better than expected employment data which took prices from 0.7091 to 0.7167 where the rally stalled. Prices have slipped to 0.7140 and while below 0.7170, target further losses to 0.6850. NZDUSD soared from 0.6839 to 0.6937 with a little help from GDP data.
WTI oil prices have held on to most of yesterday’s gains after the Energy Information Administration (EIA) said that US crude inventories shrank by 9.58 million barrels as of March 15. Opec’s decision to continue with production cuts and US sanctions on Iran and Venezuela have led to forecasts that oil demand will outstrip supply in H2, 2019. WTI rose from $58.34 to $60.30 yesterday and opened at $59.94 today.
USDCAD plunged from 1.3345 yesterday morning to 1.3258 immediately after the FOMC announcement. Prices climbed steadily overnight, despite the steep rise in oil prices, and added to their gains in early New York trading today, touching 1.3340 Prices are tracking broad US dollar strength this morning.
The intraday USDCAD technicals are mixed inside a tight 1.3270-1.3340 band. The failure to extend losses below support in the 1.3250 area and today’s break above 1.3305 favours further gains to 1.3340. If broken, it targets 1.3420. A break below the 1.3240-70 zone suggests further losses to 1.3170For today, USDCAD support is at 1.3320, 1.3280 and 1.3250. Resistance is at 1.3350 and 1.3390 Today’s Range 1.3280-1.3380