EURUSD traders were a tad cautious ahead of today’s ECB meeting. The ECB left interest rates unchanged and issued a statement idential to the one released in December. Earlier, FX traders didn’t get excited about the relatively strong German data. The Gfk Consumer Confidence Survey rose to 11.0 from 10.8 while the IFO Business Climate and Current Assessment reports ticked higher. The only negative wrinkle was a drop in IFO Expectations, from 109.4 to 108.4.
Further EURUSD direction will be determined by the tone of ECB President Mario Draghi’s press conference which is in progress as this is being written.
The US dollar extended losses in Asia against the majors and the greenback hit the overnight lows just before European traders started their day. Kiwi was the anomaly. NZDUSD crashed, falling from 0.7430 to 0.7327 when New Zealand inflation was weaker than expected. If inflation continues to drift lower, theRBNZ will leave rates unchanged for the rest of the year.
US Treasury Secretary Stephen Mnuchin’s currency comments and bullish technicals fueled the Asia rally. EURUSD climbed to 1.2458 from 1.2385 but was sold in Europe and prices dipped to 1.2413. GBPUSD’s rally was capped at 1.4327, and it opened in New York at 1.4262. USDJPY bottomed out at 108.74 and was lifted to 109.05 on profit-taking.
Once again, the World Economic Forum in Davos was the focus. Mr Mnuchin kept the downward pressure on the US dollar. In a panel discussion, he repeated that a weaker dollar benefits the US trade balances adding “I think I’ve been quite consistent on the dollar. Previous secretaries have talked up the dollar. What I’ve said is that first of all we support free trade of the currency,” Those remarks didn’t do anything to dispel the notion that the Trump administration wants a weaker dollar.
Bank of England Governor Mark Carney, also in Davos, reportedly said that Brexit costs Britain’s economy 10 billion pounds a year.
USDCAD remains under pressure due to the weak US dollar. Canada November Retail Sales, ex auto’s rose 1.6%, well above the 0.8% forecasts. USDCAD dipped on the news but losses were curtailed due to support at 1.2300.
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish while prices are below 1.2450 and looking for a test of 1.2250. A break below this level will extend losses to the 2017 low of 1.2060. For today, USDCAD support is at 1.2300 and 1.2250. Resistance is at 1.2330, 1.2370 and 1.2
Today’s range 1.2260-1.2360