US Q1 GDP beat the forecast and gave the greenback a little support. Q1 GDP rose 1.4% beating the 1.2% forecast.  However, US dollar gains have been limited due to a combination of hawkish interest rate comments from the UK, Eurozone and Canada and pre-dealing ahead of possible dollar selling for month end portfolio rebalancing flows.

Overnight, FX markets were a little more subdued.

Close Open High Low
USDCAD 1.3031 1.3032 1.3041 1.3007
EURUSD 1.1380 1.1414 1.1434 1.1375
USDJPY 112.26 112.41 112.63 112.14
GBPUSD 1.2930 1.2969 1.3005 1.2925
USDCHF 0.9594 0.9577 0.9598 0.9563
AUDUSD 0.7641 0.7675 0.7679 0.7636
NZDUSD 0.7307 0.7304 0.7330 0.7303
USDMXN 17.8605 17.8515 17.8647 17.8119
WTI   44.78 44.95 45.21 44.78


EURUSD extended yesterday’s gains, climbing from 1.1375 to 1.1434. Jaw-boning in some circles suggesting that Tuesday’s hawkish sounding remarks by Mario Draghi have been dismissed. German inflation data was a little higher than expected which added a little support to EURUSD. Traders are starting to believe that the end to ECB QE is coming.  Today’s Eurozone Business climate and Economic Sentiment indicators agree with that view.

UK consumer credit and mortgage approvals data appears to support Bank of England Governor Carney’s interest rate flip-flop.  Two weeks ago, he said that it was “too soon to raise rates.”  Yesterday, it was no longer too soon.  GBPUSD rose from 1.2925 to 1.3005.

In Asia, USDJPY bounced in a 112.14-40 range until mid-morning in Europe when it popped to 112.63, supported by demand for EURJPY.

AUDUSD rode a pop in iron ore prices and broad US dollar weakness to a three-month peak of 0.7679 from a low of 0.7636.

NZDUSD spiked from 0.7303 to 0.7330 after a rise in ANZ Business Confidence to 24.8 from 14.9. The gains vanished and Kiwi opened near to where it closed on Wednesday.

For the rest of the day, traders will be looking ahead to month end flows, a long weekend in Canada and the looming US July 4th holiday.  It isn’t unreasonable to expect a bit of US dollar demand as traders bank some profits after this week’s moves.

USDCAD Technical outlook:

USDCAD technicals are bearish. The daily chart shows that the break below 1.3180 on June 27 snapped a year long uptrend, setting the stage for further losses to 1.2660. The June downtrend stays firmly entrenched while prices are below 1.3230.

The intraday technicals are bearish while prices are below 1.3070 which is being guarded by minor resistance at 1.3050.  A break of 1.3005 will extend losses to 1.2965.

Today’s Range 1.2970-1.3060

Chart: USDCAD 1 hour