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March 16, 2021

USDCAD open (6:00 am ET) 1.2483-87,  Overnight Range 1.2472-1.2499,  Close 1.2472

FX Ranges at a Glance 

Source: IFXA Ltd/RP

FX Recap and Outlook

US Retail Sales fell 3.0% m/min February while the ex-autos component dropped 2.7%. The results were worse than forecast but not totally unexpected due to the massive Texas storm.  Still, they unsettle e some US dollar bears, and the greenback inched higher on the results.

Overnight, FX markets were directionless, rangebound, and jumpy, ahead of tomorrow’s FOMC meeting results.  The Committee will release updated dot-plot projections.  Markets are hoping for some insight into their plans for SLR (Supplemental Leverage Ration)

The SLR is a measure of capital adequacy used by the Fed to measure in percentage terms a banks ability to take losses on its assets.  On April 1, 2020, the Fed announced that they would temporarily exclude

US Treasuries and bank deposits with the Fed from the calculation.  It was meant to allow the banks to boost lending during the pandemic.

The exclusion ends on March 24.  The issues around the program are complicated.  Some analysts fear that ending the program will force traders to sell Treasury and drive up yields.

The major Asia equity indexes closed higher, and European bourses are also in the green except for the French CAC 40, which is flat.  Wall Street futures are a tad lower, and 10-year Treasury yields are 1.60%.

EURUSD rallied to 1.1951 in NY from an Asia low of 1.1915. Prices underpinned by better than expected German ZEW data . Economic sentiment rose  5.4 points to  76.6 points compared to February. However prices inched back to 1.1933 after the Retail Sales report.   The intraday technicals are mildly bullish, looking for a break above 1.1950-60 area to extend gains to 1.2000

GBPUSD was the biggest loser of the G-10 majors overnight, falling from 1.3902 to 1.3810.  The currency pair continues to suffer from BoE Governor Andrew Bailey’s dovish comments yesterday.  He said that inflation would remain below the Banks target and that the rise in yields just means the economic outlook is good.  The short term GBPUSD technicals are bearish below 1.3840, looking for a break below 1.3800 to extend losses to 1.3740.

USDJPY  traded in a narrow 109.11-109.28 range ahead of the Fed and the BoJ monetary policy meeting on Friday.  Traders took note of Governor Kuroda’s comment that he is “watching the yen” to see its impact on inflation.

AUDUSD slumped from 0.7756 to 0.7712 after the RBA minutes were deemed to be dovish.  The minutes did not reveal any new information, but traders sold the currency anyway.  NZDUSD followed AUDUSD lower.

USDCAD traded narrowly and is tracking broad US dollar sentiment.  The currency pair dipped to the bottom of its overnight range as EURUSD climbed to the top.  Steady to firm oil prices and collateral benefits from the US stimulus program are weighing on the currency pair.

USDCAD Technicals:  The intraday technicals turned positive with the break above the 1.2460 level, representing a minor downtrend from Marc h 1, which suggests a bounce back to 1.2550. For today, Support is at 1.2460 and 1.2410    Resistance is at 1.24900 and 1.2520. Todays Range 1.2460-1.2510

Chart: USDCAD 4 hour

Source:  Saxo Bank

FX open (6:00 am EDT) High, Low, and previous close

Source:  Saxo Bank