FX traders will have an easier time finding Easter eggs in a hen house then they will have looking to find FX trading action today. That’s because there is a dearth of actionable economic data from the US and Canada. Minneapolis Fed Chair Neel Kashkari delivers a speech but unless he turns hawkish and calls for three more rate hikes in 2017, traders will tune him out. Rising geopolitical risks combined with Easter weekend holiday will keep the FX majors confined to narrow ranges.
It could be worse. FX traders are thanking United Airlines for showing them that trying to trade in a narrow-ranged risk averse market is still better than flying United.
Nothing says “You are a valued customer and we appreciate your business” more than images of United Airlines beating the snot out of a passenger so an employee could have the seat.
EURUSD overcame minor downward pressure seen in Asia and rallied in Europe. A much better than expected German ZEW Economic Sentiment survey (Actual 19.5 vs. forecast 14) took EURUSD from a low of 1.0580 to 1.0615 in early New York trading.
Not to be outdone, Sterling flexed its muscles as well. Mixed to strong UK PPI and inflation data (Actual March CPI 0.4 vs. forecast 0.3) boosted GBPUSD from 1.2404 to 1.2443. It has since receded to 1.2422.
Oil prices firmed to $53.21 in Asia before inching down to $52.80 in Europe. The possibility of new supply disruptions occurring from increased Middle East tensions has underpinned prices.
Asia FX traders walked in with Fed Chair Janet Yellen’s Michigan speech still fresh. Unfortunately, what she had to say about the economy and monetary policy wasn’t. She said “It’s appropriate for the Fed to gradually raise rates.” Yawn!
Her doveish stance, combined with a report that China was amassing 150,000 troops along the North Korea border, and the on-going World vs. Syria, Russia, Iran tensions, led to risk aversion trading.
USDJPY dropped from 111.10 to 110.47 along with a 0.27% drop in the Nikkei.
NZDUSD retreated on broad US dollar demand while the Australian dollar traded sideways, supported by a mixed business Confidence/Conditions survey.
USDCAD dropped further in overnight markets due to the US dollar drift lower in Europe and rising oil prices.
USDCAD Technical outlook:
The intraday USDCASD technicals are bearish while prices are below 1.3420, supported by the move below 1.3370 which has set up a test of support in the 1.3260-1.3290 area. The support stems from the February 27 uptrend line (1.3290) and previous tops and bottoms between 1.3260 and 1.3280. A decisive break below 1.3250 would extend losses to 1.3050.
Today’s Range 1.3290-1.3370
Chart: USDCAD 1 hour