Overnight Range 1.3254-1.3321        

USDCAD is still reeling from Bank of Canada Governor Stephen Poloz’s press conference comment yesterday.  He responded to a question on interest rates with “Yes, a rate cut remains on the table.”  USDCAD soared and hasn’t looked back since. It opened in Asia at 1.3260, and has bounced between 1.3254 and 1.3293 ever since.  This mornings Canadian Manufacturing shipments data, which rose 1.5% in November, did not have any impact. What had an impact was a 15,000 drop in US initial jobless claims which gave the US dollar a boost and drove USDCAD above the overnight high.

Elsewhere, FX trading was mixed in overnight action thanks to the upcoming ECB meeting and Fed Chair Janet Yellen’s end of day speech in San Francisco, yesterday.

She said “As of last month, I and most of my colleagues–the other members of the Fed Board in Washington and the presidents of the 12 regional Federal Reserve Banks–were expecting to increase our federal funds rate target a few times a year until, by the end of 2019, it is close to our estimate of its longer-run neutral rate of 3 percent”.

USDJPY opened in Asia at 114.39 and then see-sawed within a 114.39-114.97 band until the New York open.

Kiwi made the session low of 0.7115 in very early trading and climbed steadily to 0.7150 on the back of positive PMI figure. It extended those gains in Europe due to general US dollar weakness.

Mixed Australian employment data only had a minimal impact on AUDUSD which joined in the broad-based US dollar sell-off vs. the majors. AUDUSD rose from 0.7491 to 0.7573

The European session was all about the wait for the ECB meeting.  They were expected to keep policy on hold but the increase in inflation has raised speculation surrounding the duration of quantitative easing. They delivered as expected.  They left policy unchanged and confirmed the QE extension.

GBPUSD followed EURUSD higher. UK PM May spoke at Davos, telling the world that “Britain is open for business” and other such tripe.

Oil prices were choppy within a fairly narrow band. WTI got a little support from an International Energy Agency (IEA) statement saying that the oil market was tightening, even before Opec’s cuts.

Next up is weekly EIA Crude stocks change data.  If the data confirms yesterday API data (Crude inventories declined 5.05 m/b) a rebound in WTI would provide some relief from Canadian dollar losses.

Overnight Ranges

Open High Low
USDCAD 1.3288 1.3292 1.3254
EURUSD 1.0655 1.0669 1.0623
USDJPY 114.68 114.69 114.41
GBPUSD 1.2335 1.2333 1.2254
USDCHF 1.0065 1.0082 1.0043
AUDUSD 0.7554 0.7572 0.7494
NZDUSD 0.7175 0.7198 0.7119
WTI 51.39 51.79 51.27
Close 4:00 pm EDT-Open 6:00 am  EDT


USDCAD Technical outlook:

The intraday technicals are bullish.  Yesterday’s rally above 1.3150 snapped the downtrend that had been intact since the end of December.  The double bottom in the 1.3010-20 area combined with the break above 1.3236, the 38.2% Fibonacci level of the December 28-January 17 range suggests a re-test of 1.3374, the 61.8% level.

For today, USDCAD support is at 1.3250 and 1.3210.  Resistance is at 1.3330 and 1.3370.

Today’s Range 1.3250-1.335

Chart: USDCAD 1 hour