The Loonie gave its best imitation of “Rocky” this morning. USDCAD had popped to 1.3365 in early trading and was sitting at 1.3345 when the Canada January GDP report was released.
StatsCanada wrote: “Gross domestic product grew 0.6% in January on the strength of widespread growth across both goods- and service-producing industries. With the exception of October, gross domestic product has risen every month since June 2016”.
USDCAD dropped to 1.3291 on the news.
This morning’s US data was a nonevent. US personal income rose while PCE missed the forecasts.
EURUSD drifted lower in Asia and Europe inside a narrow 1.0673-1.0693 range. The single currency ignored German economic data which included decent Retail Sales and record low employment. A worse than forecast Eurozone inflation report (HICP 1.5% vs 2.0%, y/y) didn’t have much of an impact
Sterling traded sideways to lower. EU officials released an initial draft for Brexit negotiations which will be revised many times until it is formally adopted at the April 29 EU summit.
Sterling was quiet and consolidated the losses when Article 50 was triggered.
Oil prices consolidated yesterday’s gains above $50.00/b in an uneventful session. WTI is supported by comments by Iran’s and Kuwait’s oil ministers supporting an Opec production cut extension beyond June 30.
Overnight, Asia FX action was on the slow side. The US dollar eked out gains, albeit, in narrow ranges. USDJPY climbed from 111.71 to 112.18 supported by hawkish Fed rhetoric and slightly improved China PMI data. (NBS PMI-March 51.8 vs. previous 51.6). Japanese CPI, Housing Starts and Industrial Production data was mixed
Aussie and Kiwi declined inside narrow trading bands
The month end portfolio rebalancing flows are expected to be a non-factor; however, they are difficult to quantify and could end up surprising traders. However, the real surprises could come from Washington and headlines about trade initiatives. CNN reports that President Trump will sign two executive orders aimed at combatting perceived foreign trade abuses.
USDCAD Technical outlook:
The USDCAD downtrend from the beginning of the month is still intact while prices are below 1.3385 while the Thursday and overnight USDCAD rally from the 1.3277 low is corrective while prices stay below 1.3365. A decisive break above 1.3385 targets 1.3450. For today, USDCAD support is at 1.3320 and 1.3280. Resistance is at 1.3365-85 and 1.3450.
Today’s Range 1.3270-1.3360
Chart: USDCAD 1 hour