The UK is a reluctant divorcee. On June 23, 2016, British voters threw a temper tantrum at the EU and demanded a divorce. Then they looked at the future, didn’t like what they saw, and littered the exit path with obstacles, and hurdles. UK Prime Minister went to the EU, fascinator in hand, and won an extension from March 29 to April 12. She did it again yesterday. Britain has until October 31 to agree to terms or be kicked to the curb without a deal. GBPUSD traders reacted with a yawn and prices held to a 1.3160-1.3107 range overnight.
FX markets were quiet overnight although the US dollar managed to squeeze out small gains against the Commodity currency bloc and the Japanese yen. EUR, GBP and CHF were close to unchanged at this morning’s New York open.
In Asia, USDJPY inched lower on the back of soft US Treasury yields while weak China data undermined AUDUSD and NZDUSD.
EURUSD didn’t get hurt or get any benefit from yesterday’s ECB meeting. They didn’t offer anything new. Interest rates were left unchanged and expected to stay that way for the rest of the year. However, Mr Draghi did say that the balance of risks was to the downside. German CPI was as expected at 1.4% y/y in March and ignored by traders.
The FOMC minutes were not a market moving event either. The Fed is patient and data dependent.
WTI Oil prices were supported by the International Energy Agency’s April Oil Market Report. They wrote “Production by OPEC countries in March was 2.2 mb/d lower than in November, and now there is uncertainty concerning Libya. Production by non-OPEC producers in 1Q19 was 0.7 mb/d lower than in 4Q18.” The report helped to ease the sting from yesterday’s EIA news of a rise of 7.02 million barrels in US crude inventories last week.
USDCAD was unable to break below support in the 1.3290 area and climbed to 1.3356 as WTI prices drifted down from $64.67/barrel yesterday to $63.90 in early New York trading.
Today’s US data includes weekly Jobless claims and PPI and two Fed speakers, Fed Vice Chair Richard Clarida and St Louis Fed President James Bullard.
USDCAD Technical Outlook
The intraday USDCAD technicals are mildly bullish inside a 1.3290-1.3380 trading range. A break above 1.3380 would negate the short-term downtrend pressure an target 1.3465 while a move below 1.3290 targets 1.3250. For today, USDCAD support is at 1.3330 and 1.3305 Resistance is at 1.3380 and 1.3420.
Today’s Range 1.3310-1.3380.
Chart: USDCAD daily
