The US dollar started the New York session with gains against the G-10 majors led by 0.62% rise against the British pound. The Japanese yen was a close second. Nevertheless, even with the overnight gains, the greenback is down across the board this week. The Japanese yen is the exception.
GBPUSD and Brexit news dominated the overnight session. GBPUSD shot up to 1.3375 at yesterday’s close/Asia open, dropped to 1.3240 and then rebounded to 1.3326 in early European trading. It’s been one-way down ever since, and GBPUSD opened at 1.3255. British MP’s voted to reject the option of no-deal Brexit and today will vote on extending the Article 50 deadline. The votes are not legally binding. The EU is reportedly willing to consider a three-month extension.
Weaker than expected China data knocked AUDUSD and NZDUSD lower. China Industrial Production was 5.3%, y/y (forecast 5.5%) in January while Retail Sales was unchanged from December.
USDJPY rallied, rising from 111.15 to 111.75 before dipping to 111.60 in New York trading. Yesterday’s better than expected US Durable Goods Orders and a bump up in US Treasury yields supported the move.
EURUSD traders were mostly sidelined as the focus was on GBPUSD. Still, EURUSD edged lower, undermined by news the German IFO institute cut their growth forecast to 0.6% from 1.1%.
WTI oil prices jumped to $58.65/barrel from $58.21. Prices are underpinned by yesterday’s EIA report of a 3.8 million barrel drop in US crude inventories. There is also talk that the US administration plans to cut Iran oil exports to less than 1 million barrels per day by reviewing sanctions exemptions.
The surge in oil prices combined with broad US dollar weakness undercut USDCAD and knocked it from 1.3360 yesterday to 1.3279 in Asia. Prices ticked higher to 1.3330 in early New York trading alongside US dollar gains against EUR and GBP.
Today’s US data releases include Jobless Claims and New Home Sales. Canada New Housing Price Index is also on tap.
The intraday USDCAD fare bearish while prices are below1.3340, looking for a break of support at 1.3280 to extend losses to 1.3250 and then 1.3180. Support at 1.3280 was tested and it held. A break back above 1.3340 suggests the down move was just a correction and it will be confirmed on a break above 1.3390. For today, USDCAD support is at 1.3280 and 1.3250. Resistance is at 1.3340 and 1.3390. Today’s Range 1.3280-1.3350