US Jobless Claims dropped to 210,000 and were far better than expected. Personal Income and Expenditures data were at or slightly above forecasts. That was enough to keep the bid tone to the US dollar intact.
The USDCAD rally stalled at 1.2865 in New York trading. Prices decline after Canada’s Q4 Current Account deficit narrowed to CAD 16.35 billion. USDCAD continues to be supported by the prospect of a faster pace of US interest rate hikes and softer commodity prices.
Fed Chair Jerome Powell’s testifies to the House Financial Services Committee at 10:00 am.Traders are expecting Tuesday’s hawkish bias to be repeated.
In Europe, EURUSD traded with a bearish tone in a 1.2181-1.2212 range, undermined by the break of key technical support levels at 1.2205 and 1.2220. Prices tested support at 1.2160 this morning. A very modest gain in Eurozone Manufacturing PMI (Actual 58.6 vs forecast 58.5) didn’t provide any support. That may be because Italy and France PMI reports were a tad softer.
Sterling traded cautiously in a 1.3729-1.3768 range, weighed down by mixed to weak economic data and fresh Brexit worries. UK Manufacturing PMI was as expected. The EU and UK are at odds over how Northern Ireland stays in the customs union. The UK has rejected a “hard border.”
AUDUSD was the biggest loser overnight, falling from 0.7764 to 0.7714. Mostly soft domestic data, weak commodity prices and the outlook for higher US rates weighed on the currency. NZDUSD dropped despite Terms of Trade data posting the best level ever.
USDJPY bottomed out in early Asia trading and then drifted higher into the New York open due to a bit of profit-taking and broad US dollar demand.
Global equity indices were all lower overnight, and New York equity futures point to a negative opening on Wall Street. US ISM Manufacturing PMI data is expected at 58.7, slightly below January’s 59.1 gain.
USDCAD Technical outlook:
The intrada USDCAD technicals are bullish and looking for a test of 1.2915. Strong resistance in the 1.2660-1.2720 has been crushed, leaving the door open for addition gains. A break below 1.2720 would argue for 1.26650-1.2780 consolidation. For today, USDCAD support is at 1.2740 and 1.2720. Resistance is at 1.2790 and 1.2830.
Today’s Range 1.2740-1.2830