Overnight Range 1.3363-1.3399
Sterling shone in European and early New York action.
The UK High Court ruled that the government needs parliamentary approval before triggering Article 50, the rule that sets the stage for the UK’s exit from the EU. That sparked a round of short covering and GBPUSD soared to 1.2445 from 1.2328. A better than expected UK Service PMI reading helped.
The post UK court ruling GBPUSD jump was extended when the Bank of England delivered a less dovish policy statement, suggesting that rates could go in either direction.
EURUSD traded in a narrow range in Asia and then started inching lower in Europe and in New York. The ECB’s latest economic bulletin repeated that “policy remains appropriate”.
Yesterday’s Federal Open Market Committee (FOMC)) announcment fizzled like a wet firecracker. The FOMC left rates unchanged and offered a mild rationalle for low inflation rates which, for many solidified, December rate hike expectations.
That interest rates are rising in the US should not surprise anyone. The real surprise is Donald Trump’s resislency in election polls and Hillary Clinton’s inability to wash away her stench of corruption.
Asia markets were quieter than usual due to a holiday in Japan. (Cultural Day) That didn’t stop USDJPY from slipping to 102.56, from 103.42, in a bout of safe haven demand for yen.. It bounced in Euopean trading and opened in New York at 109.90
Kiwi added to gains from Wednesday’s New York session and reached 0.7320 in Europe supported by a bump in the ANZ Commodity index. AUDUSD bounced between 0.7635 and 0.7680 supported by an improved Trade report and strong Services PMI from China.. That trading pattern continued during the European session. AUDUSD opened in New York near the top of the range.
Oil prices drifted higher in Asia helped by reports of a Nigerian pipeline explosion distrupting supply. The rally lacked conviction and stalled at $45.60.where is was at the New York open.
The Loonie was ignored. USDCAD drifted within a narrow 1.3363-99 range torn between weak oil prices and a soft US dollar.
The FOMC statement left the door wide open to a rate hike in December so today’s Non-Manufacturing (forecast 56.0) and Factory Orders data, (forecast 0.2%) will be closely scrutinized for signs that would jeopardize the rate hike view. Next Tuesday’s US election and all the drama surrounding the outcome will act as a drag on trading activity.
USDCAD technical outlook
The intraday USDCAD technicals are bearish while prices are below 1.3405 and looking to break support at 1.3350 to extend losses to 1.3240. A break above 1.3410 negates the downtrend and targets resistance at 1.3430 and then 1.3490. Longer term, the USDCAD uptrend from August remains intact while prices are above 1.3100. For today, USDCAD support is at 1.3350 and 1.3310. Resistance is at 1.3410, 1.3430 and 1.3480.
Today’s Range 1.3360-1.3440
Chart: USDCAD 4 hour