FX markets are in park. Wednesday afternoon’s 2:00 pm (EDT) release of the Federal Open Market Committee statement has sucked the life out of currency markets despite widespread expectations for a benign document. The FOMC is not expected to raise interest rates or even offer any insight into the timing for the start of the balance sheet unwind.

Nevertheless, the US dollar started the New York session with tiny gains against the majors compared to yesterday’s close.  The only exception was EURUSD which found a modest bid when Germany’s IFO report surprised to the upside.  Expectations that the ECB will begin tapering while Fed rate hike fears fade, gave support.  EURUSD drifted from 1.1631 to 1.1668.

Sterling was directionless within a 1.30009-1.3040 range with traders trying to figure out the implications of ECB tapering, politics, Brexit and the FOMC’s intentions.

In Asia, AUDUSD traders were waiting for a speech by RBA Governor Phillip Lowe on Wednesday as well as CPI data.  AUDUSD rose from 0.7904 to 0.7952.

New Zealand Trade data is released at the end of the New York day.

The minutes from last week’s Bank of Japan policy meeting showed concern about low inflation, as usual, but didn’t offer any fresh insight.  USDJPY dropped from 111.32 to 110.83.  It rallied to 111.51 in New York trading.

Oil prices are on a tear.   WTI soared to $47.24 from $46.41.  News that Saudi Arabia will reduce oil exports in August to 6.6 million barrels/day, Nigeria’s agreement to a production cap and the possibility of extending the existing production agreement beyond March 2018 boosted prices.

The oil news has undermined USDCAD which is hovering above major support in the 1.2465 area.  A doveish FOMC statement and further oil price gains could be the catalyst to drive USDCAD below the 1.2450-65 area.

USDCAD Technical outlook:

The intraday USDCAD technicals are bearish.  The downtrend from the July 12 break of support at 1.2850 is intact while prices are below 1.2580 and keeps the focus on key support at 1.2465.  A break of this level opens the door to further losses to 1.2050.  A move above 1.2580 targets 1.2750.

Today’s Range 1.2465-1.2530

Chart: 30 minute