Overnight Range 1.3033-1.3091  

FX trading has been on the quiet side in early New York trading. Even a much stronger than expected January ADP Employment report (Actual 246,000 vs. forecast 165,000) only had a minor impact.

Most FX markets took a breather following yesterday’s frantic price action  in overnight trading.

However, that was not the case for Kiwi. NZDUSD got hammered on a weaker than expected employment report dropping to 0.7257 from 0.7344 in Asia. It managed to climb back to 0.7280 by the New York open.

AUDUSD traded in a narrow 0.7554-0.7590 band and mostly ignored China Manufacturing PMI data (Actual 51.3 vs. forecast 51.2)

USDJPY opened at the 112.65 low and traded with a bid tone reaching 113.61 in Europe supported by profit taking ahead of today’s FOMC meeting. Japan’s Ministry of Finance denied that Japan was manipulating FX. Japan’s Prime Minister got into the act as well.  PM Shinzo Abe said “The criticism that our policies are intended to direct the yen lower is undeserved. Instead they are aimed at spurring inflation.” Source AP

EURUSD traded sideways in a narrow range and kept almost all of yesterday’s gains. The Trump administration’s reference to Germany and Japan as “currency manipulators” has underpinned the single currency. Eurozone Manufacturing PMI was 55.2 vs. forecast of 55.1 added a little support.

Sterling extended yesterday’s gains and ignored a dip in UK Manufacturing PMI to 55.9 from 56.1 in December

Oil prices dropped in Asia after yesterday’s API Crude stocks change report posted a 5.8-million-barrel increase in crude inventories.  WTI has recovered most of those losses in Europe and is currently sitting at $53.14.

USDCAD rallied in Asia but that move ran out of steam at 1.3091 and it drifted back down throughout the European session. USDCAD is torn between broad US dollar weakness due to Trump administration comments and a doveish Bank of Canada.  BoC governor Poloz reinforced his tone in a speech in Alberta yesterday.  He said that the rise in CAD was premature due to excess capacity.

Overnight Ranges










1.0801 1.0804











0.9891 0.9915







0.7292 0.7309



52.99 53.06



USDCAD Technical outlook:

The short term and intraday USDCAD technicals are bearish while trading below 1.3130 and 1.3090, respectively. A move below 1.3030 would extend losses to support in the 1.2980-90 area. If broken, additional losses would lead to a test of 1.2892, the 61.8% Fibonacci retracement level of the May 2016-January 2017 range.  For today, USDCAD support is at 1.3030 and 1.2980.  Resistance is at 1.3090 and 1.3130.

Today’s Range 1.3010-1.3090

Chart: USDCAD 4 hour


The Mexican Peso has been badly beaten up since President Trump’s election. USDMXN rose from 18.15 on November 7 to 22.04 on January 19 when it peaked ahead of the inauguration.  Since then, USDMXN has edged lower, undeterred by cancelled meetings between President Trump and President Nieto, announcements that the Wall will be built and threats of import taxes on Mexican goods.

A large part of the USDMXN decline can be attributed to broad US dollar weakness vs the majors due to rising protectionist fears and concerns about currency wars.  The Trump administration has already taken shots at china, Japan and Germany suggesting that their currencies are deliberately undervalued.

USDMXN Technical outlook

The intraday USDMXN technicals are bearish while prices are below 21.00 and it is currently consolidating the recent losses within a 20.65-20.90 range.  A break above 21.00 will extend gains to 21.25 and then 21.60.  A break below 20.55 which is the 38.2% Fibonacci retracement level of the Nov.-Jan. range will target the 50% Fibonacci level at 20.09.

Chart: USDMXN hourly with down trend noted.