USDCAD New York Open 1.3318-21 Overnight Range 1.3319-1.3342
USDCAD drifted down overnight, and accelerated lower in early Toronto trading, as it tested support in the 1.3250 area. The down move was fueled by rising oil prices, US dollar weakness against EUR and GBP, and the dovish bias of the Bank of Canada. Canada CPI and Retail Sales are due on Friday.
FX markets were quiet overnight. The G-10 major currencies were confined to narrow trading bands and opened in New York with tiny gains against the greenback. Traders are content to await fresh insight into the Fed’s outlook for the economy, inflation and interest rates.
The Fed pulled a “bootleg U-turn” in January, flipping from hawkish to dovish. It is doubtful that they repeat the action just 49 days later and turn hawkish. The 2019 Fed is “data dependent” and “flexible and aware of “crosscurrents.” Analysts expect that “dot-plot forecast to be downgraded to just one rate increase this year and provide updates on balance sheet normalization.
GBPUSD is probing resistance at 1.3280 in early New York trading. Traders have shrugged off Speaker of the House John Bercow’s ruling disallowing a third vote on PM Theresa May’s Brexit plan. Traders ignored data showing the UK employment data hit a 44 year low of 3.9%.
EURUSD traded sideways inside a 1.1334-1.1356 range, supported by dovish FOMC expectations. Upside momentum stalled on mixed Eurozone data releases. The ZEW Economic Sentiment Survey was -2.5%, better than the -18.7 predicted while Construction output in January was -0.7%. (Forecast 2.1%)
USDJPY opened at the bottom end of its overnight range, weighed down by soft US Treasury yields and dovish Fed expectations.
The minutes from the Reserve Bank of Australia policy meeting indicated some concern about housing prices and kept the door open to a possible rate cut. AUDUSD traded lower on the news.
WTI oil prices are trading at November 11, 2018 levels and the high for 2019. Prices are supported by the apparent extension of Opec production cuts, (Opec cancelled April meeting) sanctions against Venezuela and Iran, and hopes for a US/China trade deal.
There aren’t any Canadian data today and only January Factory Orders from the US. (Forecast 0.3% vs December 0.1%)
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish while prices are below 1.3350, looking for a test of multi-bottom support at 1.3280. A break of this zone would suggest further losses to probe the lon term uptrend line at 1.3180. For today, USDCAD support is at 1.3305 and 1.3280. Resistance is at 1.3250 and 1.3320
Today’s Range 1.3280-1.3350