There is only a few hours to go until the minutes from the June 14 Federal Open Market Committee meeting are released. At that meeting, US interest rates were bumped by 0.25 bps. Since then, the US dollar has declined against the majors, except for the Japanese yen as traders downgraded prospects for a third hike in 2017.
Overnight, the greenback ticked higher, just in case the minutes reveal some hawkish nuggets.
Risk aversion was a them in the early going following North Korea’s successful launch of nuclear capable, ballistic missile.
USDJPY dropped from 113.34 to 112.84 but recouped all the losses in Europe and is currently sitting at 113.60
AUDUSD ignored China Services PMI data (51.6 vs forecast 52.8 and climbed to 0.7630 in early Europe trading. That was it. Broad US dollar strength drove the currency pair down to 0.7592. NZDUSD opened in New York at the bottom of its 0.7261-0.7294 range.
Eurozone services PMI data didn’t drum up much interest. The single currency traded in a narrow range until the European mid-morning. Position adjusting/profit taking ahead of the FOMC minutes drove EURUSD to 1.1320 in New York trading, from an overnight peak of 1.1367
Sterling was trapped in a tight range. A slightly weaker than expected UK services PMI report help drive GBPUSD from 1.2947 to 1.2920
USDCAD dropped to 1.2913 yesterday and is probing the top of the overnight 1.2931-72 range. The drop in WTI prices may have encouraged some USDCAD buying however, the prospect of two interest rate hikes in 2017 is weighing on the currency pair.
There isn’t much in the way of key US economic data released today and there isn’t anything from Canada. The day is likely to be uneventful until the FOMC meeting minutes get released at 2:00 pm.
USDCAD Technical outlook:
The USDCAD technicals are bearish. The break below major support in the 1.2950-65 area keeps the focus squarely on the downside. A break below yesterday’s 1.2913 low will extend losses to 1.2825. Resistance is at 1.2980 and 1.3050
Today’s Range 1.2910-1.2980
Chart: USDCAD 30 minute