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February 11, 2021

USDCAD open (6:00 am ET) 1.2677-81,  Overnight Range 1.2678-1.2709,  Previous Close 1.2701

FX Ranges at a Glance:

Source: IFXA Ltd/RP

FX Recap and Outlook:  

US weekly jobless claims rose 793,000 rather than 757,000, expected. Nevertheless, the result was 19,000 better than downwardly revised 812,000 seen last week.

FX markets were off to a slow start in Asia, due to the beginning of the week-long Chinese New Year holidays.  Fed Chair Jerome Powell’s speech yesterday, didn’t offer anything new.

Mr Powell continues to lean against assessments that rising inflation will force the Fed to raise interest rates early.  The Fed previously announced that they would allow inflation to rise “moderately above 2 percent for some time.” Yesterday he also repeated, “we will not tighten monetary policy solely in response to a strong labor market.” Yesterday’s slight dip in  US January CPI to 1.4% (forecast 1.5% y/y) also pushed back against higher inflation views.

EURUSD traded sideways in a 1.2115-1.2135 range.  Prices remained bid despite the EU commission downgrading 2021 GDP growth to 3.8% from 4.2%., blaming the pandemic for the change.  Germany will extend lockdown measures until March 7.

EURUSD technicals are bullish above 1.2070.

GBPUSD opened at the bottom of its 1.3815-1.3858 range.  Brexit may be gone, but it’s not forgotten. Bank of England Governor Andrew Bailey said that EU demands for London banks to comply with EU regulations are unacceptable.  It has dire consequences for the UK’s financial industry.  The Financial Times reported Amsterdam passed London to become Europe’s largest stock trading hub.

USDJPY inched lower in Asia then rose from 104.56 to 104.75 in NY trading, coinciding with US 10-year Treasury yields inching up to 1.142% from 1.12%.

USDJPY sentiment is bearish, but prices need to break below 104.30 to break-out of the trading range.

AUDUSD rallied in Asia rising from 0.7714 to 0.7751 before dipping down to .7740 in NY.  Prices were supported by comments from the Australian Treasury Secretary, saying that the economy was recovering faster than expected.  NZDUSD tracked AUDUSD moves.

WTI oil prices are consolidating gains in a $58.20-$58.44 range, supported by yesterday’s Energy Information Administration report that US crude inventories shrank by 6.6 million barrels.  Traders are awaiting today’s monthly OIL Market Report from Opec and the IEA.

USDCAD retreated on the back of broad, but modest US dollar weakness, steady to firm oil prices, and bearish technicals.   Traders are not interested in domestic economic fundamentals, leaving USDCAD direction at the mercy of US dollar sentiment.

USDCAD Technicals: The intraday technicals are bearish below 1.2730, looking for a decisive break below the 1.2650 -60 zone to target 1.2500  Failure to break below 1.2650 suggests further  1.2650-1.2790 consolidation.  For today, USDCAD support is at 1.2650 and 1.2610.  Resistance is at 1.2730 and 1.2770  Today’s Range 1.2660-1.2710.

Chart: USDCAD hourly

Source:  Saxo Bank

FX open (6:00 am EDT) High, Low, and previous close

Source:  Saxo Bank