The US dollar has pared some of its overnight gains in early New York trading.  Positions are being adjusted ahead of Fed Chair Janet Yellen’s speech at the Executives Club of Chicago, scheduled for 10:00 am PST. Markets are looking for the Fed Chair to give her blessing to the many suggestions that rates will rise in March, made by a number of her colleagues. If that’s all she does, FX markets may react in a “buy the rumour, sell the fact” fashion.

Overnight Ranges

 Close Open  
2-Mar 3-Mar High Low

USDCAD

1.3398

 1.3412 1.3413

1.337$CAD

EURUSD

 1.0506 1.0534 1.0540

1.0503

USDJPY

114.35

 114.43 114.47

114.08

GBPUSD

1.2265

 1.2226 1.2281

1.2216

USDCHF

1.0133

 1.0116 1.0136

1.0113

AUDUSD

 0.7571 0.7557 0.7575

0.7545

NZDUSD

0.7068

 0.7022 0.7065

0.7023

USDMXN

20.0050

 19.9570 19.9402

19.9238

WTI  

 52.67 52.79 52.90

52.63
 

US futures are pointing to a small rise in equity indices at the open.  Oil prices have inched off their lows and are back to Thursday’s closing levels.

The Canadian dollar is under pressure. USDCAD inched above the overnight peak a dealt at 1.3420 in early New York trading.  The subsequent retracement has been shallow.  Diverging Canada and US interest rate trajectories supported by a doveish Bank of Canada stance has empowered USDCAD bulls.

Overnight FX markets saw the US dollar stay bid. USDJPY rallied to a peak of 114.52 and currently sits at 114.25, the middle of the overnight range.  Japanese CPI data did not have much impact.

The Caixin China Service PMI data dipped to 51.3 in February from 51.9 in January. That news spooked antipodean traders who sold AUDUSD and NZDUSD, although the declines were modest.

EURUSD traders gave up on trying to drive below 1.0495 and the single currency drifted higher throughout the overnight session.  Eurozone Services PMI and Retail Sales were below forecasts but that didn’t stop traders from taking the single currency to 1.0543 when New York walked in.  A new French poll showed Emmanuel Macron ahead of right winger, Marine Le Pen, in the first round of the French presidential election.  That news may have given a bit of support to EURUSD.

Sterling meandered aimlessly until the UK Services PMI data was released.  The 53.3 print was below the 55.1 forecast and GBPUSD dropped from 1.2263 to 1.2221

USDCAD Technical outlook:

The USDCAD technicals are bullish.  The break of resistance at 1.3380 has hung a target on 1.3460.  If that level breaks, USDCAD will re-test the January peak of 1.3598. A move below 1.3370 will extend losses back to 1.3320. The momentum indicators warn that USDCAD is overbought which could mean a period of consolidation before the next move higher. For today, USDCAD support is at 1.3370 and 1.3320.  Resistance is at 1.3420, 1.3440 and 1.3480.

Today’s Range 1.3380-1.3480

Chart: USDCAD 4 hour