The Ides of March was a bad day for Julius Caesar, 2063 years ago and it may be a bad day for US dollar bears today. The combination of better than expected American economic data and pre-weekend profit taking following this week’s US dollar sell-off may spark US dollar demand.
This morning, the US dollar opened with small losses across the board against the G-10 major currencies, following a week of losses. (except against JPY) A 2.2% loss against the British pound led the US dollar down.
The overnight session would have been as dull as dishwater without UK politics to entertain traders in the early hours of the Asia session. British MP’s voted 413-202 to ask (beg) the European Union for an extension to Article 50. The other 27 members of the EU must unanimously agree or else the UK is out of the bloc as of March 29. It has taken nearly two years since Article 50 was invoke for the British government to conclude they do not want to leave the EU without a deal, and they don’t like the deal they have. GBPUSD bounced in a 1.3205-1.3265 range overnight and inched higher in early New York trading. The diminished risk of a “no-deal” Brexit, provides scope for additional GBPUSD gains.
EURUSD has ticked higher, rising from 1.1302 to 1.1328. Eurozone HICP Inflation was 1.5% y/y in February, unchanged from January’s result.
USDJPY opened in Asia with a bid and climbed from 111.60 to 111.89 ahead of the Bank of Japan monetary policy decision. The BOJ left policy unchanged, and prices retreated down to 111.50. USDJPY inched higher in Europe and touched 111.73 in New York.
AUDUSD and NZDUSD traded firmer, in part because China Premier Li Keqiang said China would help businesses and protect jobs through infrastructure spending and tax cuts.
Oil prices got an extra lift after the International Energy Agency predicted that the global oil market might slip into a deficit in Q2. WTI rose from $58.53 at the close to $58.92 in Europe before retreating down to $58.60 in New York.
USDCAD dropped from 1.3332 in Asia to 1.3291 in Europe then rallied to 1.3316 after the New York open. USDCAD is consolidating this weeks losses just above key support in the 1.3260-1.3290 zone. Selling pressure is due to broad US dollar selling vs the majors, and high oil prices. Bullish longer term technicals and the Bank of Canada’s dovish bias are limiting the downside.
USDCAD could see a fresh selling pressure if this morning’s Manufacturing Shipments data is better than the forecast of a 0.4% m/m rise. US data includes Michigan Consumer Sentiment (forecast 95.3 vs previous 93.8) Capacity Utilization and the JOLTS job openings report.
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish below1.3350, looking for a break of support in the 1.3250-90 zone to extend losses to 1.3120. The 100 day moving average is at 1.3294 and a decisive move below that level puts the 200 day moving average (1.3183) in play. A break above 1.3350 targets 1.3390 and then 1.3430. For today, USDCAD support is at 1.3290 and 1.3250. Resistance is at 1.3350 and 1.3390
Today’s Range 1.3280-1.3250