USDCAD Overnight Range 1.2947-1.3132      

USDCAD bounced this morning after an overnight plunge. The post-FOMC free-fall from 1.3370, found a floor at 1.3088 when Toronto closed.  The floor gave way again, in Europe, and USDCAD hit 1.2947 before bouncing on what in all probability is just a profit taking rally. The US delivered a mixed bag of data (Jobless Claims, Current Account) but was meaningless to traders, coming on the heels of the FOMC decision.

Yesterday afternoon, it was revealed that Janet Yellen is actually a Leprechaun and the FOMC statement revealed the location of the pot of gold. Actually, the location was only revealed to US dollar bears and they were all over it like Irish on a Guinness.

The FOMC’s surprisingly doveish statement appeared to ignore their previous claims that “rate hikes are data dependent”.  They downgraded the US economic outlook and cut back the dot-plot rate hike forecasts for 2016 to just two which led to wide-spread US dollar selling.

The big question is: Was the doveish FOMC a pre-ordained move by the G20 to orchestrate a devaluation of the US dollar? Something to think about when you get your “Irish” on today.

In Asia, AUDUSD stayed bid and mostly ignored a mixed labor report, mainly due to questions surrounding the actual data and a confusing clarification from the Australian Bureau of Statistics.  Better than expected Q4 GDP gave Kiwi an added boost while USDJPY stayed heavy on general US dollar weakness.

US dollar sellers emerged in Europe, extending Wednesday’s New York dollar losses. It was a lively session with traders complaining about poor liquidity.  The Swiss National Bank left rates unchanged. EURUSD punched through resistance at 1.1240 and hit 1.1340.  GBPUSD held on to its post FOMC gains after the Bank of England left rates unchanged and stating it was “more likely than not that rates will rise in next three years”.

The balance of today will be given over to further analysis of the FOMC statement and projections.  Although the negative US dollar bias will remain, bouts of profit taking will ensure a choppy trading day.

 USDCAD technical outlook

The USDCAD technicals are bearish with the break of 1.3175 setting up a move to 1.2725. Intraday, the technicals are bearish while trading below 1.3060 looking for another test of the overnight low at 1.2947. A move above 1.3060 could extend gains to 1.3160.

Today’s Range 1.2940-1.3060

Chart: USDCAD daily with Fibonacci retracement