The Bank of England caught traders by surprise. Traders expected a slightly dovish statement and unchanged interest rates. Instead, three of the nine members on the Monetary Policy Committee voted to raise rates, up from 2 previously. GBPUSD soared, rising from the overnight low of 1.3106 to 1.3211, immediately after the news.

The first day of Summer in 2018 arrived a couple of hours ago. The warm air comes with an even hotter global trade environment and that gave the US dollar a bid in overnight trading.

Prior to the BoE announcement, EURUSD and GBPUSD were in a photo-finish for the worst-preforming G-10 major currency.  Kiwi led the commodity currency bloc down while the Japanese yen was unchanged.

Robust US growth and Fed Chair Powell’s comments yesterday underpinned the US dollar.  The Fed Chair repeated his outlook that robust growth means a gradual rise in interest rates There wasn’t any new, top tier economic data available, leaving Powell’s remarks as the only game in town.

EURUSD drifted down steadily throughout the overnight session, except for a brief blip around the Swiss National Bank policy statement.  They left rates on hold and commented on global trade risks.  Bundesbank President Jens Weidmann said that it was “time to get the ball rolling” on ECB policy normalization., which provided the single currency with a little support.

USDJPY rallied in Asia, rising to 110.75 but the gains were reversed when US Treasury yields fell.  Prices opened in New York at 110.39, unchanged from yesterday’s close.

NZDUSD didn’t get much support from Q1 GDP data Actual (0.5% vs forecast 0.5%, q/q).  However, prices bounced off the overnight low of 0.6827 and returned to yesterday’s New York closing price.  AUDUSD popped in Asia on the back of AUDNZD demand but gave back those gains.

USDCAD was largely ignored, but traded with a bid tone, supported by broad US dollar strength.  WTI oil prices dropped from $65.77 to $64.37 as the Opec General meeting in Vienna kicked off. Rumours of production increases have undermined prices.

This mornings US economic reports may give the greenback additional support. Initial Jobless Claims (forecast 220,000), Philadelphia Fed Manufacturing Index (Forecast 29.0) and Housing Price Index (forecast 0.3%, m/m) are on tap.

USDCAD Technical Outlook

The week-old, gently upward sloping trend channel continues to contain USDCAD price movements.Support is at 1.3270 and Resistance is at 1.3350.  Longer term, the break above resistance in the 1.3060 and 1.3125 area has shifted the focus to 1.3500.

Today’s Range 1.3270-1.3350