Overnight Range 1.3145-1.3198       

Canada Housing starts were unchanged from December but slightly higher than what was predicted. Builders may have cared but FX traders did not. USDCAD has inched lower since the New York open, undermined by bearish technicals.

The US dollar is lost. The greenback alternates between strength and weakness and cannot get traction in either direction. This week’s void in actionable US economic data gets part of the blame. So does the elvation of policical uncertainy in France, Brexit chatter and of course, Trump tweets.

USDJPY bounced of both sides of a 112.03-112.54 trading band.  Traders were jockeying for position ahead of Friday’s meeting between President Trump and Prime Minister Abe.

Random walks in narrow ranges was the story for the antipodean currencies overnight, as well. Tuesday’s message from the RBA appears to have been forgotten and AUDUSD is moving with broad US dollar sentiment.

EURUSD is a little worse for wear and is back to levels not seen since the end of January.  French election concerns combined with Greece, EU and IMF chatter have highlighted some issues facing the Eurozone. US rate hike talk in March is not helping. Nevertheless, EURUSD remains inside the 1.0570-1.0830 band that has contained price movements since January 11.

Sterling has managed to hang on to most of the gains made yesterday when Kirsten Forbes, Bank of England Monetary Policy Committee member said “In my view, if the economy remains solid and the pick-up in the nominal data continues, this could soon suggest an increase in Bank Rate”

Sterling closed at 1.2511 and spend the overnight session in a 1.2470-1.2520 band.

Oil price bulls got more bad news at the end of Tuesday. The API weekly crude stocks change report showed a huge 14.2-million-barrel gain in US inventories. Oil prices dropped from $53.02/b to $52.62.

USDCAD is tracking US dollar moves vs. the majors and in that environment, domestic data takes a back seat.

This morning release of the EIA Crude stocks report will be closely watched to see if it validates the API release yesterday. If so, oil prices will continue to fall which should limited USDCAD downside.  However, if the $50.00/$55.00 range in WTI remains intact, oil price movements will have a diminished impact on the Canadian dollar.  Price action outside of that range will be a different story.

Kiwi traders will be looking ahead to this afternoon’s Reserve Bank of New Zealand interest rate statement and press conference.  The RBNZ is expected to leave rates unchanged and deliver a doveish statement.

Overnight Ranges

Open

8-Feb-17

High

Low

USDCAD

1.3159

1.3198

1.3145

EURUSD

1.0646

1.0690

1.0642

USDJPY

112.37

112.53

111.86

GBPUSD

1.2491 1.2523

1.2477

USDCHF

0.9995

0.9999

0.9966

AUDUSD

0.7631

0.7644

0.7613

NZDUSD

0.7299 0.7315

0.7285

USDMXN

51.78 20.6868

20.5846

WTI

51.78

51.90

51.25

Close 4:00 pm EDT-Open 6:00 am EDT

USDCAD Technical outlook:

The USDCAD technicals are mixed.  Intraday, the USDCAD outlook is bullish following the break above 1.3080 and again at 1.3130, looking for a move above resistance at 1.280 to extend gains to 1.3380.  On the other hand, the short term technicals are bearish. The latest USDCAD rally stalled at the downtrend line from the January peak, the third in a series of lower highs which suggests further downside ahead.  For today, USDCAD support is at 1.3130 and 1.3280.  Resistance is at 1.3200 and 1.3240

Today’s Range 1.3140-1.3240.

Chart: USDCAD 4 hour

MEXICO  

USDMXN has spent all of February bouncing within a 20.2850-20.8365 range and it is currently sitting in the middle of that range although it has a modest downward bias.  A break above 20.6820 would extend gains to the top of the range while a move below 20.4485 would put the bottom of the range in play.

Chart: USDMXN  4 hour

Source: Saxo Bank