FX trading has died on the vine in early New York action. Traders are counting down the hours until the 11:00 am PST release of the Federal Open Market Committee meeting policy statement.  It is a statement only meeting and no one expects any change in policy.  However, FX activity has been stifled “just in case.”

Overnight, the recent FX ranges stayed intact despite central bank member speeches, key economic data, and an oil price rally.

Asia got the ball rolling early.  New Zealand tallied better than expected Trade data.  The June trade balance deficit narrowed to -$3.66 billion from -$3.8 billion in May, year over year.  Exports rose and imports shrank.  NZDUSD rose as well, climbing from 0.7411 to 0.7434.  The rally petered out and NZDUSD retreated to 0.7411 as Europe started trading.  Prices inched back to the top by the New York open.

AUDUSD was choppy as well.  Traders were unimpressed with the inflation report which was close to expectations and sold the currency.  Reserve Bank of Australia Governor Phillip Lowe didn’t help matters when he downplayed rate hike risks based on what other central banks were doing.  It was a rehashed statement but still led to selling. AUDUSD reclaimed 0.7920 in Europe.

Bank of Japan Deputy Governor Nakaso said that the BoJ would continue with its current easy money policy. The words did not have any impact and USDJPY was stuck in a 111.78-112.07 range.

EURUSD traded quietly in a narrow range but remains close to the recent peak. The currency has derived some support from ECB Governing Council member Ewald Nowotny’s comment that is wise to gently ease back on stimulus.

GBPUSD rebounded from its overnight low in New York, rising from 1.3001 to 1.3061. UK preliminary Q2 GDP was as expected

WTI rallied from $47.88 to $48.57   Prices have been supported by an improving outlook by Opec and a large drop in crude inventories according to the API data yesterday (Actual -10.8 million barrels)

USDCAD drifted quietly in a tight 1.2506-16 band and inched higher in New York.  The steep drop in USDCAD, the proximity of major support in the 1.2450-65 area and today’s FOMC statement have led to consolidation.

USDCAD Technical outlook:

The intraday USDCAD technicals are bearish.  The intraday downtrend channel stays intact while prices are below 1.2540 and above 1.2420.  The bottom level is being guarded by major support in the 1.2450-1.2465 area.  Longer term, the downtrend channel from June 21 stays intact while prices are below 1.2680 which would be the target on a break above 1.2540.  For today, USDCAD support is at 1.2480 and 1.2450.  Resistance is 1.2540 and 1.2580.

Today’s Range 1.2480-1.2580

Chart: 30 minute