Overnight Range 1.3076-1.3210    

USDCAD rallied overnight and pressure resistance at 1.3210 prior to the release of the Canadian Merchandise Trade data which handily beat the  $0.35 billion forecast, rising to $0.92 billion, in December. The tiny bump in exports  was an added bonus.  However, the dip was fairly shallow and USDCAD remains well above yesterday’s close.

Philadelphia Federal Reserve President Patrick Harker stamped US rate hike fever right on the forehead of an FX market distracted by the Donald Trump circus.  At the end of the day on Monday, he said  “ I think March should be considered as a potential for another 25-basis point increae,” adding “I still am supportive of three rate hikes this year, of course with a major caveat, depending on how the economy evolves and policy, fiscal policy, evolves.”

USDJPY didn’t really react to Mr. Harker’s comments except to stop falling.  It traded sideways in Asia and then climbed from a low of 111.59 to 112.42 at the New York open.

A higher than expected New Zealand Inflation Expectations report, released by the RBNZ (Actual 1.9% vs. previous 1.7%, y/y) boosted NZDUSD from 0.7300 to 0.7374. The move didn’t last and Europe sold kiwi down to 0.7290 by the New York start.

In Australia, the RBA left the overnight rate unchanged (1.5%) predicted 3% growth for the “next couple of years” and expected inflation to rise above 2% in 2017.

AUDUSD jumped to 0.7680 from 0.7630 but reversed all those gains in Europe and opened in New York at 0.7610.

Philly Fed President Harker’s comments awoke the sleeping euro bears.  EURUSD dropped from 1.0755 in Asia to 1.0655 by the time New York started. A host of Eurozone specific issues including political uncertainty in France and new IMF-Greece issues, undermined the single currency

Sterling flat-lined in Asia but in Europe, was weighed down by the ongoing UK parliamentary debate on Brexit.  A vote on Article 50 is expected Wednesday.  GBPUSD dropped from 1.2485 to 1.2349

Oil prices traded lower within a $52.73-$53.20 range and had little impact on FX trading.

USDCAD rallied on the back of Harker’s rate hike comments which underscored the divergent Fed and Bank of Canada interest rate policies.

There isn’t any US data so the prospect of a March rate hike will underpin the greenback.

Overnight Ranges

Open
7-Feb-17

High

Low

USDCAD

1.3196

 1.3200

1.3076

EURUSD

1.0665

 1.0748

1.0656

USDJPY

112.30

 112.40

111.60

GBPUSD

 1.2376 1.2485

1.2349

USDCHF

0.9994

 1.0006

0.9907

AUDUSD

0.7618

 0.7679

0.7609

NZDUSD

0.7294

 0.7373

0.7292

USDMXN

20.56

 20.7473

20.5490

WTI

53.80

 53.21

52.73
Close 4:00 pm EDT-Open 6:00 am  EDT

 

USDCAD Technical outlook:

The intraday USDCAD technicals are bullish following the break of the January downtrend line at 1.3040 and the subsequent break of resistance at 1.3150.  A move above 1.3250 opens the door to further gains to 1.3380. However, the rally has been very sharp which could lead to some consolidation within a 1.3150-1.3250 zone.  For today, USDCAD support is at 1.3170 and 1.3140.  Resistance is at 1.3210 and 1.3240

Today’s Range 1.3140-1.3240.

Chart: USDCAD 30 minute

 

MEXICO

USDMXN broke above the January downtrend line and is in a mild uptrend while prices are above 29.5915 but needs to crack above 20.7500 to extend gains to 20.8410.  A move below 29.5850 would extend losses to 20.5390

Chart: USDMXN  1 hour

Source: Saxo Bank