USDCAD traded higher overnight and is probing key resistance in the 1.3380 area.  A dovish Bank of Canada policy statement would shatter the resistance level and put 1.3550 into play. The BoC is widely expected to leave interest rates unchanged at 1.75%.  The tone of the statement will be key. The BoC may acknowledge that the recovery in oil prices has improved its outlook, but positive comments may be offset by concerns about global growth, and on-going trade issues.

The US dollar inched higher against the G-10 majors, although for most of the currency pairs, the gains were marginal.  USDJPY and USDCHF are unchanged at the open. The OECD downgraded global growth forecasts to 3.3% in 2019 (previous 3.5%) and 3.4% in 2020. (Previous 3.5%)  They blamed on-going trade tensions and political uncertainty in Europe for the cuts.

AUDUSD was the worst performing currency pair, falling from 0.7090 to 0.7025 after Australia Q4 GDP was weaker than forecast. (Actual 0.2% vs forecast 0.3%, q/q and 2.3% vs forecast of 2.5%, y/y.  Macquarie Bank changed its RBA interest rate prediction from unchanged to a      50 bp rate cut in May or August.

Bank of Japan board member Yutaka Harada called for more stimulus, which wasn’t anything new.  USDJPY traded sideways in a 111.75-111.90 range.

EURUSD consolidated Tuesday’s losses in a tight 1.1290-1.1309 band.  Better than expected US ISM non-manufacturing services PMI and dovish expectations for tomorrow’s ECB policy meeting weighed on the single currency.

GBPUSD continues to be weighed down by Brexit issues.  Traders are concerned about the lack of progress in dealing with crucial issues, particularly the UK’s demand for legally-binding amendments to the Irish border back-stop.  GBPUSD traded in a 1.3125-1.3176 range and opened in New York at 1.3144.

Today’s US data includes ADP employment (forecast 189,000) and Trade.  Canada releases Ivey PMI (forecast 57.9 s.a vs January 54.7) and International Merchandise Trade.

USDCAD Technical Outlook

The intraday USDCAD are bullish while prices are above 1.3350, looking for a break of 1.3380 to extend gains to  1.3450, 1.3490 and then 1.3660.  A break of 1.3350 targets 1.3310 and then 1.3280  For today, USDCAD support is at 1.3310 and 1.3280.  Resistance is at 1.3350, 1.3380.

Today’s Range 1.3350-1.3450 900