USDCAD dropped like a stone in early Asia trading. A story in the Globe and Mail quoting “sources with knowledge” stated that the US dropped the demand for 50% American content in all vehicles that are sold in the US and built in Canada or Mexico. USDCAD dropped from 1.3075 to 1.3013 on the news, albeit in a thin market due to a holiday in Japan. The focus shifts to this afternoon’s FOMC meeting.
The US dollar gave back some of yesterday’s gains and opened in New York with small losses against the G10 majors. The New Zealand dollar was the exception. It lost a little ground due to bearish sentiment ahead of tonights Reserve Bank of New Zealand policy meeting.
Sterling traded sideways in a 1.3990-1.4016 range until UK employment data was released. A drop in the unemployment rate to 4.3% (previous 4.4%) and a rise in average hourly earnings lifted prices to 1.4074 as New York opened.
EURUSD opened at the session low in Asia and trickled higher until New York started.. USDJPY traded in a similar fashion drifting lower but inside a narrow range.
Global equity indices traded lower and finished in the red ahead of today’s FOMC meeting. Wall Street futures are suggesting a lower open this morning, as well.
Oil prices are buoyant, supported by the API report of a 2.74 million barrel decline in US crude inventories and hopes that today’s EIA data will show a similar result.
FX markets will be moribund until the FOMC statement and Chair Powell’s press conference. Markets are expected a 0.25% rate hike and an upward tweak to the dot-plot forecasts.
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish while prices are below 1.3070, supported by the overnight move below support at 1.3040. A move below 1.2990 sets up a test of uptrend line support in the 1.2950 area. A recovery above 1.3080 will shift the target to 1.3125 and higher.
Today’s Range: 1.2990-1.3080