There were not any surprises from this morning’s US inflation data. February CPI rose 2.2% as forecast (January 2.1%), but it was a tick higher than the January data. Core CPI was unchanged at 1.8%. The US dollar lost a bit of ground on the initial reaction, but that was more due to weak long dollar positions getting cut than a change in sentiment.
The US dollar inched higher in overnight trading as traders were wary ahead of this mornings release of US February CPI data. They needed have worried.
In Asia, USDJPY recouped all of its losses from yesterday, in part because of today’s US CPI data. Japanese political scandal faded from FX markets, perhaps because no one is surprised about a crooked politician. USDJPY climbed steadily rising from 106.26 to 107.21.
NZDUSD outpaced gains in AUDUSD. Kiwi support came because the acting RBNZ governor’s speech was an FX non-event. AUDUSD was supported by a better than expected NAB Business confidence reading (Actual 21 vs forecast 16)
EURUSD traded sideways in a narrow 1.2315-1.2344 range. A lack of Eurozone data kept traders sidelined. ECB President Jean-Claude Juncker called on UK PM May to clarify Britains demands. GBPUSD was sidelined ahead of the UK budget statement and US inflation data.
USDCAD continued to drift higher an opened in New York at the overnight peak. Prices are supported by ongoing concerns around the Nafta renegotiation and the increasing risk that CAD/US interest rate differentials will continue to widen in America’s favour. USDCAD dropped from 1.2875 to 1.2835 after the inflation data,
Bank of Canada Governor Stephen Poloz delivers a speech titled “ Today’s Labour Market and the Future of Work.” He is not likely to deviate from the gist of last week’s policy statement, so it should not have any impact on FX trading
USDCAD Technical Outlook
The intraday technicals are mixed inside a 1.2800-1.2860 range. A break above the 1.2860 area opens the door to a retest of 1.3000. A break of support at 1.2800 puts 1.2740 in play. For today, USDCAD support is at 1.2800 and 1.2750. Resistance is at 1.2860 and 1.2915.
Today’s Range: 1.2800-1.2890