USDCAD is bouncing around inside the confines of yesterday’s range with traders mostly ignoring US data and oil prices while the count-down the hours to the 1800 GMT FOMC policy announcement.
US February Retail Sales were as expected (Actual 0.1% vs. forecast 0.1%, m/m, ex-autos 0.2%, as forecast). CPI rose 0.1% vs the forecast for unchanged. FX traders just yawned on the news.
|Close 4:00 pm EDT-Open 6:00 am EDT|
This afternoon’s FOMC meeting could provide fireworks. US rates are expected to rise by 0.25% which is fully priced in. However, the dot-plot forecast in the summary of Economic Projections is the wild card. Any indication that US rates could rise higher or faster than expected would spark a US dollar rally and the Canadian dollar would sink in the process.
That’s not all. Dutch election results start trickling out after 1700 GMT. A victory by the far-right candidate would undermine EURUSD in the short -term.
Overnight, the US dollar dipped in an active overnight session with data, headlines and today’s FOMC meeting all playing a role.
AUDUSD inched up on general US dollar weakness while NZDUSD got an added boost from an improvement in the Current Account deficit.
USDJPY traded in a tight band with US dollar bull’s enthusiasm tempered by the Dutch election and the FOMC meeting.
Sterling got a boost from a modest improvement in the UK Labour Report, leaping to 1.2254 from 1.2164 on the news. The move was not sustained and GBPUSD is trading at 1.2194. Bloomberg reports that the EU may be playing “silly buggers” with the UK. Brexit timetable. Bloomberg reports that if Theresa May triggers Article 50 at the end of March, the EU may not authorize negotiations until after their June 20 meeting. That cuts into the 2-year time table for Brexit negotiations.
EURUSD drifted off the opening low of 1.0605 but halted at 1.0638. ECB Chief Economist Peter Praet said that Eurozone economic growth has not translated into a sustained recovery in inflation so the ECB should not reassess its policy stance. That statement contradicts sentiment that Mario Draghi tweaked ECB policy towards neutral. FX traders ignored the remarks. Eurozone employment rose 0.3% in Q4 beating the forecast of a 0.2% gain.
Oil bulls got some much-needed support in the form of the API Weekly Crude Stocks change report, released at 4:30 pm on Tuesday. The API reported US crude inventories declined by 531,000 barrels. WTI jumped to $48.71 from $47.83 and then spent the overnight session trading in a narrow $48.30-$48.60 range. Traders will be looking to the EIA report at 1430 GMT to validate the API results.
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish while prices are below 1.3495 looking for a break below the March uptrend line (1.3450) to extend losses to 1.3380. A move above 1.3495 will lead to a retest of 1.3600. For today, USDCAD support is at 1.3450 and 1.3420. Resistance is at 1.3495 and 1.3520
Today’s Range 1.3420-1.3495
USDCAD 30 minute