USDCAD is lost in space. Traders are torn between buying  USDCAD on Nafta trade cancellation fears and selling USDCAD because of domestic economic strength. Traders are waiting for fresh domestic data on Thursday (Retail Sales) and Friday (CPI) to get back involved.

The Bank of Japan policy meeting was the major event in Asia.  The policy statement and press conference led to a bout of volatility. USDJPY dropped from 111.00 to 110.54 after the statement and then rallied to 111.16 during BoJ Governor Kuroda’s press conference as he sounded dovish. European traders sold USDJPY, driving it to 110.49 at the New York open.

Kiwi was in demand in Asia, briefly, supported by expectations for a higher than expected CPI reading on Wednesday. NZDUSD bounced inside a 0.7305 to 0.7352 range. AUDUSD could not hang on to gains above 0.8000.  Profit-taking drove prices from 0.8022 to 0.7963 by the time  New York started trading.

EURUSD bounced in a 1.2223-1.2275 range supported by better than expected German and EU ZEW Surveys. Gains were capped by concerns that the ECB’s message on Thursday could be more dovish than expected.

GBPUSD printed 1.4002 and then it was all down hill, albeit in a very unimpressive fashion. The decline halted on minor support at 1.3937 where it was when New York walked in.

WTI oil prices traded sideways, in a $63.77-$64.03 range supported by new IMF global growth forecasts, Ope/Russia chatter of cooperation on production into 2019 and inventory drawdowns. However, the risk of increased US shale enthusiasm and the strong gains seen this year, have limited topside gains.

The Davos World Economic Forum is in high gear today. Justin Trudeau is giving a speech, but his words will not have any impact on markets.  President Trump has put trade wars in focus again after he slapped new tariffs on imported washing machines and solar panels.

There isn’t much in the way of domestic or US data today suggesting another dull FX session.

USDCAD Technical outlook:

USDCAD is grinding higher in a narrow wedge, bound by 1.2440 on the bottom and 1.2500 on the top.  A break either side will result in a 0.0050 point move but do nothing to resolve the broader 1.2350-1.2650 range consolidation.  For today, USDCAD support is at 1.2440 and 1.2390.  Resistance is at 1.2500 and 1.2550.

Today’s Range 1.2440-1.2550