The US dollar closed yesterday on a firm note but spent the overnight session trading sideways as traders bided their time until this afternoon’s FOMC policy statement. The statement isn’t expected to deviate very far from the September 26 statement which should support the greenback.
EURUSD is trading at the bottom of its overnight 1.1413-1.1443 range. Germany’s trade surplus narrowed as exports declined 0.8%. The European Commission trimmed their 2019 growth forecast from 2.0% to 1.9%.
GBPUSD retreated alongside the euro, falling from 1.3148 to 1.3088 in early New York trading. Weak RICS Housing Price data (Actual -10% vs forecast -2%) and pre-FOMC profit taking undermined the currency pair. BBC News reports that UK Cabinet Ministers have been given a draft of the proposed Brexit deal to study, even though it is not complete. The Irish border issue continues to be the fly in the Guinness. The UK Foreign Minister Jeremy Hunt dampened expectations of an imminent deal saying “it would be pushing it” to expect a deal in the next seven days.” Ireland’s Deputy Prime Minister warned: “I would urge caution; an imminent breakthrough is not necessarily to be taken for granted, not by a long shot. Repeatedly people seem to make the same mistake over and over again, assuming that if the British cabinet agrees something, then that is it, everything is agreed.”
USDJPY climbed alongside a rally in the Nikkei and supported by gains in US Treasury yields. USDJPY traded in a 113.49-113.74 range overnight and is trading at the top of that range in New York.
NZDUSD spiked to 0.6815 at the New Zealand market open following the Reserve Bank of New Zealand policy statement. The move was reversed almost instantly. The RBNZ left rates unchanged and said they would stay that way until 2020.
Oil prices continue to trade with a negative bias. WTI oil is in a downtrend while prices are below $63.50/barrel, the downtrend from mid-October’s $72.20/barrel level. Prices are weighed down by rising US crude inventories, and fears that global demand will slow because of the US/China trade spat. In addition, the US pumped a record 11.6 million barrels per day in October, exacerbating rising supply concerns.
USDCAD is trading above support in the 1.3060-70 area. Traders are torn between USDCAD demand because of rising US interest rates and the prospect of a more aggressive Bank of Canada posture from improving Canadian growth. Yesterday’s better than expected Ivey PMI report supported that view. Today’s Canadian New Housing Price Index and Housing Starts data will not play much of a role in trading. Neither will US initial Jobless claims because of the looming FOMC statement.
The USDCAD uptrend from the 1.3060 area is still intact. The intraday technicals are bearish below 1.3120. A break above 1.3120 targets 1.3160 while a move below 1.3060 would lead to 1.3010. For today, USDCAD support is at 1.3060 area and then 1.3010. Resistance is at 1.3120 and 1.3160.
Today’s Range 1.3060-1.3150