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USDCAD open (6:00 am ET) 1.2650-54, Overnight Range 1.2633-1.2681 Close 1.2642
FX Ranges at a Glance
Source: IFXA Ltd/RP
FX Recap and Outlook: The US dollar churned following the CPI data release and then settled lower. Headline CPI rose 1.7% y/y as expected, with the bulk of the increase attributed to rising gasoline prices. The US dollar losses came even as the yield on 10-year treasuries cinched higher to 1.551%.
Source: US Bureau of Labor Statistics
FX markets are trading sideways and cautiously, with traders awaiting the final approval of the $1.9 trillion stimulus bill. It should be anti-climatic, yet traders are concerned about “knee-jerk” reactions.
It is also a slow news day, which means minor issues get blown out of proportion.
EURUSD chopped around in a 1.1870-1.1912 range. The bias is still negative as prices are weighed down by widening interest rate differentials favouring the US, and expectations that Eurozone growth will lag that of America. The ECB monetary policy meeting statement is tomorrow.
GBPUSD had a busy overnight session but opened unchanged after trading in a 1.3847-1.3913 range. The currency pair is tracking broad US dollar sentiment, and Friday’s while waiting for Friday’s GDP data.
USDJPY rallied to 108.91 before retreating to 108.39 following the US inflation report. Prices are closely tracking US 10-year Treasury yields. The technicals are bullish above 108.000 looking for a test of 110.00
AUDUSD chopped around in a 0.7670-0.7718 range, weighed down by US dollar demand and iron-ore price weakness. RBA Governor Philip Lowe re-affirmed that the OCR rate will remain at 0.1%. He also said that the currency was not overvalued.
USDCAD is being bounced about by shifting US dollar sentiment but managing a modestly bearish bias, supported by firm oil prices. The Bank of Canada will not have a press conference following the release of the monetary policy statement. Instead, Deputy Governor Lawrence Schembri will deliver remarks tomorrow.
USDCAD may suffer if the statement hints at QE tapering. The 9.4% jump in Q4 GDP suggest that economy is far stronger than the BoC expected and warrants an adjustment of stale guidance.
USDCAD Technicals: The intraday technicals are bearish below 1.2680 which guards the longer term downtrend line at 1.2735 and are looking for another test of support in the 1.2500-50 area. For today, USDCAD support is at 1.2610 and 1.2550. Resistance is at 1.2680 and 1.2730. Todays Range 1.2570-1.2670
Chart: USDCAD daily
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank