USDCAD Open (6:00 am) 1.3389-92 Overnight Range 1.3379-1.3427
A flock of doves did to US dollar bears what pigeons do to statues. It started in New Zealand when the RBNZ policy statement was far more dovish than expected. The RBNZ wrote: “Given the weaker global economic outlook and reduced momentum in domestic spending, the more likely direction of our next OCR move is down.” It was definitely down for NZDUSD which plunged from 0.6913 to 0.6795 in a heartbeat. The Kiwi plunge sideswiped AUDUSD which dropped from 0.7136 to 0.7093.
USDJPY was uneventful in Asia, but bounced between 110.30-110.70 during the European session and opened at the low in New York. Falling Treasury yields weighed on the currency, with the 10-year Treasury yield dipping to 2.360% at the New York open.
The US dollar was in demand in Asia and early Europe trading. Comments from ECB President Mario Draghi didn’t help. Mr Draghi trumped the RBNZ’s threat of rate cut when he said the ECB is willing to delay interest rate hikes. He said: “Just as we did at our March meeting, we would ensure that monetary policy continues to accompany the economy by adjusting our rate forward guidance to reflect the new inflation outlook.” EURUSD dropped to 1.1248 from 1.1280. That move was reversed as New York opened.
Sterling chopped about in a 1.3167-1.3214 range and started the New York session near the top of the range. Prices are supported by the belief that British MP’s are reluctant to leave the EU without a deal. The Brexit political drama continues today.
Oil prices popped to $60.05/barrel after the American Petroleum Institute said US crude inventories fell 1.92 million barrels last week. Prices dipped in Europe and are trading at $59.52 in New York as traders await the EIA data this morning.
USDCAD bounced inside a narrow range, tracking AUDUSD and NZDUSD price movements in Asia and then following WTI price activity in Europe. Canada’s January trade deficit was expected to improve to -$3.5 billion from -$4.50 billion in December. It didn’t . The deficit widened to $4.25 billion and USDCAD rallied as a result.
The USDCAD technicals are bullish. However, prices are conolidating recent gains in a 1.3380-1.3440 range A topside break would restart the rally and target 1.3550 and 1.3650. However, a break below 1.3380 suggests further conolidation in a wider, 1.3300-1.3440 band. For today, USDCAD support is at 1.3380 and 1.3340. Resistance is at 1.3440 and 1.3480.
Today’s Range 1.3380-1.3440