Global FX markets are choppy, and rangebound, except for the Canadian dollar which is attempting a rally. The US dollar lost ground against the G-10 major currencies by the end of yesterday. The exception was the Japanese yen which rose and the New Zealand dollar which was unchanged. The dollar sell-off was not continued overnight. The greenback opened this morning with small gains across the board except against the Loonie.
In Europe, GBPUSD tested resistance in the 1.2810 level after reports that UK Prime Minister Theresa May is asking the EU to extend the Brexit date beyond March 29. Prices retreated back to 1.2750 when Brexit Secretary Stephen Barclay said he had had any talks.
EURUSD traded in a 1.1433-83 range with weaker than expected Eurozone Economic Sentiment, Business Climate and Industrial Confidence surveys capping top-side moves.
USDJPY consolidated yesterday’s gains in a 108.52-109.07 range. Prices are supported by the rebound in US Treasury yields 10-year US Treasury yields have risen from 2.545 on January 1 to 2.701 overnight. Prices are also bolstered by recent global equity market gains and the US/China talks.
The antipodean currencies were rangebound although AUDUSD did suffer when Australia reported the November trade surplus narrowed.
USDCAD has nearly entirely reversed its December rally after oil prices recovered from their lows. The discount on Western Canada Select, (WCS) Alberta’s main crude export, has narrowed sharply. It is now $10.50/b down from $29.50/b at the end of November according to Bloomberg. The WCS price improvement comes on the heels of rising oil exports by rail and production cuts by Alberta. WTI rallied from $42.50/b on Boxing Day to $49.70/b yesterday. WTI is supported by yesterday’s news that Saudi Arabia is planning to cut crude production to 7.1 million/barrels per day.
USDCAD dropped through major support in the 1.3330-60 area yesterday, opening the door to further losses to 1.2950. The catalyst for additional selling may come from the tone of Wednesday’s Bank of Canada interest rate statement and Governor Poloz’s press conference
Today’s US economic data won’t be a factor for FX markets. Canada’s releases its Trade data for November. The trade deficit is expected to widen because of lower crude exports. Traders will be watching for headlines from the US/China trade talks and Wall Street price action.
The intraday USDCAD technicals are bearish. Yesterday’s break of the 1.3330-60 support zone snapped the uptrend line that was intact since October 1. The former support zone will now become resistance. The drop will not be linear. There is Fiboancci retracement level support at 1.3240 and 1.3135 The 100 day moving average comes into play at 1.3170. For today, USDCAD support is at 1.3270 and 1.3240. Resistance is at 1.3305 and 1.3340. Today’s Range 1.3250-1.3340