It’s FOMC day today. Janet Yellen and her colleagues are expected to announce the start of balance sheet reduction and release fresh economic forecasts. The bar is really low for a hawkish surprise

Overnight,  the New Zealand current account deficit narrowed.  It was expected but helped to lift NZDUSD from 0.7305 to 0.7373

AUDUSD rallied in concert with Kiwi, supported by dovish FOMC expectations.  AUDUSD climbed from 0.8001 to 0.8047.

Dovish Fed expectations and President Trump’s threat to “totally destroy North Korea” in his U.N. speech put modest downward pressure on USDJPY.  It slid to 111.30 from 111.63.

Sterling was the star in Europe. Better than expected August Retail Sales (Actual 1.0% vs. forecast 0.2%, m/m) boosted GBPUSD from 1.3508 to 1.3606. The rally didn’t last and GBPUSD dropped back to 1.3512 in New York trading


EURUSD traders sat on their keyboards. The single currency had a positive bias inside  a narrow 1.1987-1.2018 range

Oil prices remained firm  The Iraqi oil minister said Opec and its partners were considering extending or deepening supply cuts, according to Reuters. API reported a gain of 1.4 million barrels in US crude inventories after the close, yesterday.  WTI leapt from $49.50 to $49.93 and extended those gains to $50.08 in early New York trading.

USDCAD dropped from the overnight peak of 1.2300, supported by broad US dollar weakness and firm oil prices.

FX markets are likely to be rather dull today, at least until the FOMC statement and summary of projections is released at 2:00 pm EDT. That data and Janet Yellen’s press conference should set the tone for FX markets until December.

USDCAD Technical outlook:

The intraday USDCAD technicals are modestly bearish while prices are below 1.2295 and looking for a break of 1.2210 to extend losses to 1.2160.  A break of 1.2295 shifts the focus to resistance at 1.2370.  Longer term, the recent rally appears corrective as long as prices remain below, 1.2410, the top of the downtrend channel from May.

Today’s Range 1.2210-1.2310

Chart:  USDCAD daily