USDCAD Overnight Range 1.3111-1.3175
The smell of political uncertainty wafting around the Eurozone is getting ranker and it has put downward pressure on EURUSD. The greenback opened in New York with gains against all the G10 currencies except for yen..
The Asia market didn’t quite see it that way. EURUSD traded sideways in a narrow 1.0533-1.0566 range.
It was USDJPY that was under pressure. Cleveland Fed President Loretta Mester, speaking in Singapore, delivered a mixed message on interest rates. “I think we’ve made very good progress on both [U.S. maximum employment and price stability]: Inflation’s not quite back up to 2 percent, but it’s moving up and the forecast says that’s going to continue. And from my point of view, from what the monetary policy tool can do, we’re at full employment,” according to CNBC. USDJPY dropped from 113.68 to 112.97 at the New York open.
AUDUSD and NZD were firm but only Kiwi managed to keep the gains in the European session. AUDUSD dropped from a peak of 0.7708 to 0.7672, which is where it was when New York traders walked in.
EURUSD sellers emerged in Europe on a mix of nervousness ahead of today’s release of the FOMC minutes, France politics and Brexit concerns. Eurozone CPI was as expected. EURUSD dropped from 1.0546 to 1.0494 when New York started.
Sterling tracked EURUSD moves and fell from 1.2505 to 1.2439, in part due to a downward revision in Q$, year over year GDP to 2.0% from 2.2%.
Oil prices made a feeble attempt at rallying in Asia but that move faded. The proximity of strong resistance above $55.00/b and contradictions between rising US supply and global demand led to profit-taking. Goldman Sachs is sticking to its $57.50 WTI forecast for Q2.
USDCAD was rather lively. Asia sellers pushed it to a low 1.3111 but that was it. USDCAD soon joined the US dollar rally party and it climbed to a peak of 1.3175 at the start of New York trading.
Canada Retail Sales data for December (Forecast 0.0%, ex-autos 0.6%) could give the Loonie a reprieve and drive USDCAD lower, if the report is better than expected. However, a large gain could be dismissed quickly if it is all due to higher oil prices. After that, FX markets may go into sleep mode until the FOMC minutes get released at 2:00 pm EST. Markets may be disappointed if they expect the minutes to provide any more insight into the Fed’s thinking than what Janet Yellen gave the US Congress last week.
|6:00: AM Open|
|Close 4:00 pm EDT-Open 6:00 am EDT|
USDCAD Technical outlook:
The USDCAD technicals are bullish. The uptrend from the February 16 low remains intact while prices are above 1.3120 which was also the former downtrend level. There is good resistance in the 1.3180-1.3210 area representing previous tops and the 38.2% Fibonacci retracement level of the end of December February range. A break above 1.3210 opens the door to further gains to 1.3280 and 1.3360. For Today, USDCAD support is at 1.3150 and 1.3120. Resistance is at 1.3180, 1.3210 and 1.3250.
Today’s Range 1.3120-1.3220
Chart: USDCAD 1 hour
Source: Saxo Bank
USDMXN crashed yesterday afternoon when the Mexico Foreign Exchange Commission announced a $20 billion FX hedging plan as another currency intervention tool. USDMXN dropped from 20.4820 to a low of 19.9225. It has recovered slightly and sits at 20.0370. The new measures cracked below support at 20.1380 which had held since November. It will now revert to resistance. The downtrend will remain intact while prices are below 21.0000
Chart: USDMXN 30 minute
Source: Saxo Bank