USDCAD Overnight Range 1.3350-1.3403  

The US dollar is reasonably bid in low volume FX markets so far this morning, supported by a 0.3% gain in core inflation which will put a smile on the faces of FOMC hawks. This report is on the heels of a strong nonfarm payrolls report and will have markets looking for a hawkish FOMC statement at 11:00 am PST.

Overnight, FX volumes were lower than usual but traders bought US dollar’s in a “just-in-case” move to mitigate risks if the markets get surprised by the results of today’s FOMC meeting.

In Asia, USDJPY popped on doveish comments by BoJ Governor Kuroda, alluding to the BoJ’s ability to cut interest rates further. Kiwi was soft on a weak dairy outlook while ignoring favorable current account data.

The European session was more subdued than the Asia session. The UK unemployment report was mixed and GBPUSD reaction was ambivalent. EURUSD continued going nowhere while USDCHF traders waited for Thursday’s Swiss National Bank interest rate decision. Rates could get cut but that is the minority view.

USDCAD is meandering aimlessly, well within yesterday’s trading range although with a modestly bearish bias due to yet another report of a Russia/Opec meeting, this time on April 17.

There is a ton of debate about how hawkish or doveish the FOMC will be, with a risk being that the FOMC dot plot will show more rate hikes than what is currently priced in by markets.

USDCAD technical outlook

The intraday USDCAD technicals are bullish while trading above 1.3330 which is a counter trend rally that is close to the February downtrend line that comes into play in the 1.3390-1.3410 area.  A decisive break above 1.3410 will extend gains to the downtrend channel top in the 1.3500-10 area. A break below 1.3330 targets 1.3210

Forecast Range for the day 1.3310-1.3405

Chart USDCAD  1 hour