FX trading has stalled as traders stay on the sidelines ahead of this afternoon’s release of the FOMC minutes from May 3.  At issue is whether the minutes reveal a “hawkish” bias to the deliberations and the discussion about balance sheet shrinkage.  Because of the minutes, today’s US Housing data will only have a minimal impact.

The Asia markets were unsettled, briefly.  Moody’s downgraded China’s sovereign debt from Aa3 negative to A1 Stable.  Traders were surprised and the news led to selling of the commodity currency bloc. The move didn’t last and prices were at their Tuesday closing levels when New York opened.

Overnight Ranges

	23-May-17	24-May-17
	Close	Open	High	Low
USDCAD	1.3517	1.3507	1.3538	1.3504
EURUSD	1.1181	1.1176	1.1196	1.1170
USDJPY	111.80	111.82	112.02	111.74
GBPUSD	1.2961	1.2985	1.2997	1.2956
USDCHF	0.9760	0.9771	0.9769	0.9743
AUDUSD	0.7477	0.7472	0.7482	0.7443
NZDUSD	0.7003	0.7025	0.7025	0.6991
USDMXN	18.6565	18.6270	18.6894	18.5802
WTI	51.53	51.56	51.85	51.43
Close 4:00 pm EDT-Open 6:00 am EDT

 

AUDUSD dropped from 0.7482 to 0.7443 on the China downgrade mainly because Iron Ore prices dropped 1.16 percent to close at $60.74 per ton.

The NZDUSD drop was shallow and the recovery stronger, making Kiwi the best performing G10 currency overnight.

USDJPY opened in New York virtually unchanged, happy to consolidate yesterday’s gains while traders awaited today’s release of the FOMC minutes.

EURUSD traded sideways in a narrow 1.1170-1.1196 range.  ECB officials admitted that the Eurozone recovery was solid but stressed the need to be cautious about withdrawing stimulus.

Sterling drifted higher, rising from 1.2956 to 1.2997 in early European trading retraced most of those gains ahead of the New York start. Fears of a “hard” Brexit have capped the topside for the time being.

Oil prices climbed in Asia, supported by yesterday’s API report of another decline in US crude inventories. The gains were unwound during the European session and WTI opened unchanged from Tuesday’s close.

 The Canadian dollar has ignored the recent pop in oil prices.  USDCAD has traded around the 1.3500 area. News that Shell wants to bail out of it’s $4.1 billion stake in Canadian Natural Resources may have helped to underpin USDCAD.

The Bank of Canada policy meeting statement is in the spotlight for USDCAD traders.  Unfortunately, the spotlight only has 15 watt bulbs and the statement will be overshadowed by the minutes from the FOMC meeting.

The BoC will not release any forecasts or even have a press conference which suggests the statement will be very similar to the April 12 statement.

USDCAD Technical outlook:

USDCAD intraday technicals are bearish while prices are below 1.3560. Prices are consolidating inside the 1.3460-1.3540 area with the short-term uptrend line from mid-April providing another layer of support. A break below 1.3460 will lead to a test of the 100-day moving average at 1.3344.  A break above 1.3560 will shift the focus back to 1.3750

Today’s Range 1.3460-1.3560

Chart: USDCAD 4 hour