A drop in US Jobless claims didn’t have any impact on FX as the US dollar continued to slide against the majors. WTI rose above $46.00/barrel and spurred renewed USDCAD selling.
The Federal Open Market Committee’s decision to leave interests on hold combined with a downward tweak to GDP growth forecasts sent the US dollar into a tailspin overnight. The tone of the statement and Janet Yellen’s press conference opened the door a little wider to a December rate hike . Asia and Europe traders responded with a “I’ll believe it when I see it” attitude. EURUSD moved slightly higher in Asia but accelerated in Europe. GBPUSD followed EURUSD higher but Brexit concerns are a bigger problem for Sterling than US interest rates, at the moment.
In Asia, NZDUSD couldn’t sustain its post FOMC gains thanks to the Reserve Bank of New Zealand. They left interest rates unchanged at 2.0% but had a clear easing bias and NZDUSD was sold. USDJPY failed to extend modest gains following the Fed announcement and traded sideways.
The Canadian dollar had a really good night. USDCAD sank steadily in Asia and Europe on the back of firm oil prices and the FOMC stance. USDCAD’s failure to break above resistance at 1.3250 and its subsequent break below 1.3180 and 1.3120 caught traders “long and wrong”. Stop loss selling exacerbated the move down.
USDCAD technical outlook.
The intraday USDCAD technicals are bearish following yesterday’s break of the September uptrend line at 1.3180. The subsequent move below 1.3120 suggests that a short term top is in place at 1.3250 and shifts the focus to a test of support at 1.2980 which represents the 61.8% Fibonacci retracement level of the September range. For today, USDCAD support is at 1.3020 and 1.2980. Resistance is at 1.3080 and 1.3120.
Today’s Range 1.2980-1.3060
Chart: hourly chart with Fibonacci levels