USDCAD Overnight Range 1.3239-1.3314
European Central Bank President, Mario Draghi, delivered what he promised to deliver in December 2015, it was just 3 months later. The multi-pronged stimulus package surprised sceptical traders who were still nursing a grudge after being burned in December and as a consequence, poorly positioned for today’s news.
The ECB cut the interest rate on the on the deposit facility (expected), on the marginal lending facility and the rate on the main refinancing operations. (not expected). In addition, the QE program was increased from €60 million to €80 million while making corporate bonds eligible for purchase.
EURUSD plunged dropping, 0.0160 points instantly and touched 1.0823. That move was fleeting. EURUSD rebounded viciously, gaining 0.0290 points during Mario’s press conference when Mr. Draghi said that the ECB did not intend to lower rates again. Volatility, today thy name is Euro.
Rate cuts were the story in Asia, as well. The Reserve Bank of New Zealand chopped the OCR by 0.25 bps. They were concerned with China, market turmoil and a deteriorating outlook for global growth. They cut the OCR rate by 0.25 bps and NZDUSD tanked dropping from 0.6687 to a low of 0.6616.
FX trading during the European session was mostly on hold until the ECB statement.
USDCAD managed to hang on to yesterday’s post Bank of Canada interest rate statement gains. After the ECB, USDCAD dipped rallied and then moved back to 1.3255, where it sat prior to the ECB news.
The rest of the trading session will be dictated by EURUSD and EUR/cross trading and anticipation of the FOMC meeting next week.
USDCAD technical outlook
The intraday technicals are bearish while trading below 1.3405 supported by the break of minor support in the 1.3310-1.3320 area, looking for an extension of the losses to 1.3000. However, there is a solid support from prior tops and bottoms between 1.3205-45 which should slow USDCAD downside. USDCAD needs to reclaim 1.3530 to negate the downtrend. For today, USDCAD support is at 1.3240, 1.3220 and 1.3180. Resistance is at 1.3290 and 1.3350.
Chart USDCAD 1 hour
