The US dollar opened in New York very close to the levels it was at when it closed on Tuesday as FX traders pared back their risk aversion fears. The geopolitical issues haven’t gone away or even disappeared from the headlines but with the approach of the extended Easter weekend holidays, traders were content with the positions they had.
The Canadian dollar could be in for a big day. Although the Bank of Canada is universally expected to leave interest rates unchanged, the reaction will come from the governor’s tone at the press conference. For the past few months, Mr. Poloz has preferred to highlight the risks to the Canadian economy while dismissing a wave of upbeat economic data reports. That act may be getting stale.
Overnight, safe haven demand pushed USDJPY to a low of 109.36 from a peak of 109.74 in Asia. Those losses were reversed in European trading and USDJPY opened virtually unchanged. It appears counter-intuitive for yen to rally as a safe haven when it is one of the countries being threatened by North Korea.
Kiwi was the biggest loser, dropping from 0.6960 to 0.6927 by the New York open, undermined by softer than expected China inflation data. China March CPI was 0.9% vs. forecast of 1.0%, year over year.
AUDUSD chopped around in a 0.7485-0.7507 range and opened in New York, unchanged from its close.
Sterling couldn’t get any traction and the UK employment report was mostly ignored. Bank of England governor Mark Carney spoke at a FinTech conference, but didn’t discuss monetary policy.
EURUSD dipped in Asia, rallied in Europe and the retreated to open in New York virtually unchanged from Tuesday. Traders are looking forward to the extended Easter Holiday break which will close markets on Friday and Monday.
Oil prices inched higher, supported by talk of an extension to the Opec production cut agreement. Additional support came from yesterday’s API report of a 1.3-million-barrel drawdown in US crude inventories.
Today’s US data is third tier and unlikely to have an impact on trading.
USDCAD Technical outlook:
The intraday USDCASD technicals are bearish looking for a break of support in the 1.3290-1.3010 area to extend losses to 1.3260. It has not been below that level since February 27. If 1.3260 is broken decisively, USDCAD will quickly drop to 1.3080. A move above 1.3380 is needed to shift the focus to the topside. For today, USDCAD support is at 1.3290 and 1.3260. Resistance is at 1.3360, 1.3380 and 1.3410
Today’s Range 1.3260-1.3360
Chart: USDCAD 30 minute
Source: Saxo Bank