The US dollar is on the defensive after markets were disappointed with yesterday’s FOMC interest rate outlook. The US dollar spent the entire overnight session consolidating losses.
This morning’s US data dump which included Initial Jobless claims, Philadelphia Fed Manufacturing Index, Housing Starts and Building Permits had virtually zero impact on FX trading. That’s because it was mixed and came too soon after yesterday’s FOMC meeting. Meanwhile, despite the large moves, the US dollar is still locked inside well-defined ranges against most of the majors which suggests further consolidation ahead.
There was a lot of data and event risk in overnight markets but those risks did not come to pass. Instead it was “steady as she goes”.
The Bank of England left interest rates unchanged, as expected but there was one dissenter, Kirsten Forbes. She wanted a rate hike. That dissent triggered a spike in GBPUSD which rose from 1.2248 to 1.2367.
The Dutch election, which had unsettled EURUSD traders prior to the polls opening, is over. The hard-right candidate gained some seats but still lost the election. EURUSD traders celebrated by ignoring the news. Eurozone inflation was as expected at 2.0%. The single currency was choppy inside a 1.0706-1.0745 range.
The Bank of Japan policy meeting was the focus in Japan. They left everything as it was. USDJPY fell from 113.33 to 112.89 but quickly recovered and opened in New York at 113.41.
Kiwi traders were hit with a soft GDP report when they walked in. New Zealand Q4 GDP was 0.4% vs. forecasts for 0.7% gain, q/q. NZDUSD dropped from 0.7043 to 0.6992 on the news and then spent the rest of the time until the New York opening bouncing within a 0.6985-0.7026 band.
AUDUSD dropped from an opening peak of 0.7714 to 0.7677 on a weaker than expected Unemployment report. Australia lost 6,500 jobs instead of the forecast gain of 16,000 but since much of the decline was attributed to the volatile part-time component, all was forgiven during the European session. AUDUSD rallied back to 0.7714 and then inched lower as New York started.
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish while prices are below 1.3440 and supported by the break below support at 1.3360. The move below 1.3305 *50% Fibonacci retracement level of March range, targets 1.3250 (61.8% level). If 1.3250 breaks, 1.3180 will be tested. A rally above 1.3360 would suggest a short-term floor is in place at 1.3270 and suggest consolidation within a 1.3250-1.3450 band. For today, USDCAD support is at 1.3270, 1.3250 and 1.3210. Resistance is at 1.3320 and 1.3360
Today’s Range 1.3250-1.3320
USDCAD hourly chart