Overnight Range 1.2981-1.3051      

The US dollar was in a full scale retreat in overnight trading, undermined by what many believe was a doveish FOMC statement, which eliminated almost all hopes for a March rate increase.

The CME FEDWatch tool confirmed that view, placing the odds for a March increase at 17.7%,. They were 20.3% prior to the statement..

The Australian dollar got the ball rolling and was the best performing G10 currency thanks to an assist from a better than expected trade report. (Actual Trade $3.5 billion vs. forecast of $2.2 b)

The Japanese yen was a close second in the overnight performance stakes. Japanese officials have been making a lot of noise pertaining to their FX policies in what can only be seen as a conciliatory gesture to Washington.  In that vein, Japan’s Government Pension Investment Fund (GPIF), the world’s largest, is rumoured top be planning to invest in US infrastructure. Reuters reported that Japan is considering increasing energy imports from the US.

In Europe, EURUSD cracked above resistance at 1.0800 with the risk for additional topside gains, supported by the break of key support in the US dollar Index at 99.40. President Trumps comments about Germany encouraging a weak euro have underpinned EURUSD.

GBPUSD traded sideways in Asia, drifted higher in early European trading and the retraced those gains prior to the Bank of England interest rate announcement. The BoE left rates unchanged and GBPUSD plunged to the overnight low (1.2624)

Oil prices have rallied despite yesterday’s EIA report of another large build in US crude inventories.  WTI rose from $53.38 to $54.31 and is currently trading just below the peak, supported by the weak US dollar.

USDCAD rode the dollar wave lower but once again could not make any headway below support in the 1.2960-90 zone, despite rising oil prices.

The tone of yesterday’s FOMC statement will continue to be debated today. Wednesday’s strong ADP employment report will bolster forecasts for Friday’s nonfarm payrolls report. That could lead to the US dollar recouping some of its recent losses as trader’s trim positions ahead of the data.  Today’s US economic releases which includes Initial Jobless claims should not have much of an impact.  President Trump is ratcheting up the rhetoric over Iran’s ballistic missile test which could be another reason why there is renewed US dollar demand.

Overnight Ranges

Open
2Feb17 High Low

USDCAD

1.2996

 1.3051 1.2981

EURUSD

1.0809

 1.0817

1.0763

USDJPY

112.38

 113.35

112.25

GBPUSD

1.2650

 1.2704

1.2638

USDCHF

0.9885

 0.9936

0.9874

AUDUSD

0.7668

 0.7673

0.7578

NZDUSD

0.7308

 0.7314

0.7245

USDMXN

20.5836

 20.7420

20.6645
WTI 54.20 54.31

53.52

Close 4:00 pm EDT-Open 6:00 am EDT

USDCAD Technical outlook: 

The USDCAD technicals are bearish while prices are below 1.3110 representing the downtrend line from the January peak and looking for a break below 1.2960 to extend losses to 1.2890 and then 1.2730.  For today, a break above 1.3020 will extend gains to 1.3050 and then 1. 3110.. USDCAD support is at 1.2980, 1.2960 and 1.2910.

Today’s Range 1.2970-1.3050

Chart: USDCAD 4 hour

 

MEXICO

USDMXN drifted lower in overnight trading due to broad US dollar weakness following what many believe was a doveish FOMC statement. The larger factor undermining the US dollar moves is the Trump Administration assertion that major economies, China, Japan and Germany, are keeping their currencies low to promote exports.

USDMXN Technical outlook

The intraday USDMXN technicals are bearish while prices are below 20.67, looking for a move below 20.5010 to extend losses to 20.2910 and then 20.0950

Chart: USDMXN 4 hour with Fibonacci levels