Overnight Range 1.3124-1.3166
President Trump’s plan for “extreme vetting” interrupted travel plans for many and sent the US dollar “travelling” as well. He said “My policy is similar to what President Obama did in 2011 when he banned visas for refugees from Iraq for six months. The seven countries named in the Executive Order are the same countries previously identified by the Obama administration as sources of terror. President Trump.”
The US dollar gapped lower at the open, albeit, in extra-thin Asia markets due to Chinese New Year holiday’s.
New Zealand’s December Trade report (Actual -$3.20 billion, y/y) was right on the forecast and only had a brief impact on trading. NZDUSD and AUDUSD rallied at the open but that move peaked before Europe opened. European traders didn’t see the world the way the Asia traders did and both currency pairs were sold, retracing the Asia move by mid-morning in London.
USDJPY was sold from the get-go, dropping from 115.12 to 114.25 in Asia, then bounced within a 114.92 -114.50 range in Europe.
EURUSD rallied from 1.0688 to 1.0740 in Asia and then dropped down to 1.0672 by the New York open. Eurozone Confidence and Sentiment data was better than expected. However, EURUSD gains on the news were small and short-lived.
Sterling traded in a similar fashion within a 1.2508-99 range, opening in New York at the bottom.
Oil traders were confused. WTI dropped on news of rising rig counts in the US implying the resurgence of US crude production. That move was reversed in Europe on sentiment that Opec production cuts are working and will keep prices supported.
USDCAD tracked the broad dollar moves
FX markets are still trying to come to grips with disappointment over Friday’s US GDP data, the impact from the US-Mexico War of the Wall and the effects of Trump’s immigration announcement.
Today’s US PCE report for December was a mixed bag. A small rise in Personal spending (Actual 0.5% vs. forecast 0.3%) was offset by a small dip in Personal Income (Actual 0.3% vs. forecast 0.4%)
This week is chock full of key data including nonfarm payrolls on Friday, which may keep US dollar trading inside current ranges.
The focus is still Trump and the risk of further FX upheaval from “Trump Tweets.”
Close 4:00 pm EDT-Open 6:00 am EDT
USDCAD Technical outlook:
The intraday USDCAD technicals are mildly bullish while trading above 1.3120 which represents a minor uptrend line from last week’s 1.3050 low. A break above resistance in the 1.3180-1.3210 area suggests a retest of the downtrend line from the end of December (Currently 1.3290.) While prices are below this downtrend line, the risk remains for another test of 1.3050 support. For today, USDCAD support is at 1.3140, 1.3120 and 1.3080. Resistance is at 1.3180 and 1.3210
Today’s Range 1.3140-1.3210
Chart: USDCAD 4 hour with downtrend and resistance