Canada November GDP rebound from October’s flat reading and posted a 0.4% gain, as expected. According to many economists, the gain suggests Q4 GDP is at 1.9%. USDCAD extended earlier losses and tested 1.2250 support. USDCAD rode a roller-coaster overnight, rallying in Asia and falling in Europe. The fact that Trump did not trash Nafta in his speech and expectations of sizeable USDCAD selling today due to month-end portfolio rebalancing flows undermined the currency pair.
The US dollar opened in New York with losses across the board. President Trump’s State of the Union address on Tuesday night, was must-watch TV for traders. It ended up being a lot of “rah, rah, blah, blah.” Mr Trump’s penchant for outlandish comments, threats and hostile hyperbole could have wreaked havoc in financial markets across the globe. It didn’t happen. Instead, it was another display of congressional callisthenics. “Speak, Stand, Clap, Sit” and repeat after every other sentence. By the end of the night, the audience had dropped 20 pounds.
When the speech was out of the way, the focus shifted to economic reports. AUDUSD plunged on a soft inflation data, falling from 0.8102 to 0.8046. The losses were erased in European trading and prices recovered to 0.8104 at the start of New York trading. NZDUSD traded steadily higher supported by broad US dollar weakness.
In Japan, chopped in a 108.70-109.07 range when the BoJ Summary of Opinions report was released. Afterwards, bearish technicals and a weak US dollar led to another test of support at 108.60, which held.
EURUSD ticked higher in Asia and Europe, underpinned by bullish technicals but the rally stalled at resistance in the 1.2460 zone. Buying enthusiasm tempered ahead of today’s FOMC announcement.
Sterling traders tracked EURUSD moves and ignored negative Brexit news. A UK government report was leaked saying that the UK economy would be worse off under three scenarios. Instead, broad US dollar weakness and Bank of England Governor Carney’s comment that slack in the economy had been removed, underpinned GBPUSD.
Oil prices dropped late yesterday when API reported a 3.3 million barrel rise in crude inventories. WTI dropped to $63.70 and are now trading at $64.16/b
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish while prices are below 1.2310 while the short term technicals point lower, while prices are below 1.2410. Support is in the 1.2240-50 area, which if broken will lead to 1.2060. for today, USDCAD support is at 1.2240 and 1.2210. Resistance is at 1.2310 and 1.2360.
Today’s range 1.2210-1.2310