USDCAD Overnight Range 1.2990-1.3080
The US dollar was sold following Fed Chair Janet Yellen’s speech in New York, yesterday afternoon and that pattern continued in Asia, Europe and early New York trading. Ms. Yellen expressed concern about the “pace of global growth” and particularly about how smooth China’s transition from investment to consumption will be. The prospect of another drop in oil prices was cited as another risk.
Ms. Yellen’s remarks were the antithesis of last week’s speeches by a series of Fed speakers (Bullard, Lacker, Evans, Lockhart) who were on the hawkish side of the ledger, leading to speculation of an April/June rate hike. Not any more.
In Asia, G10 currencies all rose against the US dollar and there wasn’t any local data to impede the dollar sell-off. Europe joined the party in the early going but profit takers emerged to cap the gains and the US dollar recovered, ever so slightly.
This morning, US ADP employment posted a gain of 200,000 jobs. Bloomberg headlines say that noted hawk, Chicago Fed President, Charles Evans is calling for two hikes in 2016 and is not seriously concerned that inflation is getting out hand. Both items led to a minor bout of profit taking in short US dollar positions.
There isn’t any notable data until tomorrow. Then there is a lot, including Eurozone CPI, Bank of England’s Mark Carney speech and of course the usual month end portfolio rebalancing flows.
USDCAD technical outlook
The Intraday and short term USDCAD technicals are bearish. The intraday downtrend remains intact while trading below 1.3060, looking for a break below 1.2980 to test 1.2920. The short term downtrend from the end of January remains intact while trading below 1.3330 and it is looking for a test of support in the 1.2810-30 area. For today, USDCAD support is at 1.3000 and 1.2970. Resistance is at 1.3060 and 1.3090.
Chart: USDCAD daily